UzLiDeP talks about underground economy eating up the state budget

According to the 21st goal of the New Uzbekistan Development Strategy for 2022-2026, it is planned to increase the gross domestic product per capita by 1.6 times in the next five years due to the provision of stable high growth rates in economic sectors, and by 2030 these incomes will create a sufficient basis for entering the ranks of “middle-income countries”.

The share of value added and excise taxes in the state budget revenue structure is high, making up about 40%. Therefore, there is a need to strengthen control in order to combat the shadow economy and ultimately increase budget revenues in the pharmaceutical, alcohol and tobacco industries, which are considered large tax payers.

These issues were discussed at the next meeting of the press club of the Liberal Democratic Party of Uzbekistan on October 19.

At the meeting, officials made their proposals for radical reduction of the underground economy, prevention of illegal circulation of goods, especially elimination of drug, alcohol and tobacco smuggling, protection of consumer rights, and provision of transparent competition.

According to Muhabbat Ibrokhimova, consultant to the director of Agency for Developing Pharmaceutical Network, today the total turnover of drugs in the pharmaceutical market of Uzbekistan is 1 billion 400 million dollars. But not all of them can be called quality drugs. Also, we cannot say that this amount is the total volume of the pharmaceutical industry’s turnover.

“During the next 9 months, on the basis of thousands of appeals received from individuals and legal entities, several thousand unregistered and low-quality drugs with 7,000 names were identified in Uzbekistan,” she said.

Also, according to Komiljon Abdurakhimov, head of the Alcohol-Tobacco Market Regulation and Winery Development Agency, over two years, the share of contraband products in the tobacco market increased from 4% to 15%. If it is taken into account that more than 2 trillion soums of excise taxes were collected from tobacco products last year, the growing share of the underground economy in the circulation of tobacco products becomes an extremely dangerous situation for the state budget.

Ulugbek Kosimov, head of the State Customs Committee, answered the question: Do not customs officials bear the main responsibility for smuggling into the territory of Uzbekistan?:

“There is a misconception in the society or among the population that contraband products enter through customs posts. In fact, each citizen entering the territory of Uzbekistan is allowed to import up to 10 “packs” of tobacco products. There is also this factor. But in the past 2-3 years, after the border customs posts were equipped with modern equipment, the illegal importation of products through the customs posts decreased sharply”.

The official cited the lack of demarcation and delimitation of border areas as one of the reasons for the entry of such goods. As the reason for not being able to bring them into the country, he highlighted the installation of inspection complexes with the ability to scan vehicles entering the territory of the country.

Akmal Anorkulov, the head of the State Tax Committee Department for studying the problems of underground economy, noted the importance of collective control in the fight against smuggling and counterfeit products. He emphasized that the cashback system, which is returned through the unified tax system, is a motivation for the population, and through this method, citizens have made a great contribution to fighting the underground economy.

According to the information provided by him, since the beginning of the year, more than 1.1 million citizens have received a total of 421 billion soums cashback in the system of 1 percent, which seems insignificant at first glance.

Following the event, deputies of UzLiDeP, together with representatives of ministries and agencies, agreed to radically reduce the underground economy, to prevent illegal circulation of goods, to establish collective control, first of all, in the fight against drug, alcohol and tobacco smuggling.