With the ever growing population and advancement in development, the demand for goods and services worldwide has incredibly increased. Sadly, as the legal trade increases, illicit trade, particularly smuggling, has also followed suit. Smuggling is the supply, distribution and sale of products on which applicable taxes in the country of consumption are not paid.
Not only does smuggling lead to revenue losses to a country, affecting provision of public services, but also causes unfair competition in the market. This is because smuggled goods are sold cheaply compared to those for which taxes have been paid.
In the long run, if the practice is not tackled, items that followed tax procedure and locally produced goods are outcompeted. The effects on domestically manufactured items are far-reaching as establishments could collapse due to lack of profits.
But that is not all. The vice also poses health risks to consumers because smuggled items are oftentimes inferior and counterfeits. Because such items go via unofficial routes, authorities such as the Uganda National Bureau of Standards cannot examine them to ascertain quality and safety.
The unlawful practice is one of the challenges that revenue administrators face globally on a daily basis. And like sister revenue authorities elsewhere, Uganda Revenue Authority (URA) is constantly fighting the problem.
Averagely, URA apprehends 11 smugglers every day. For instance, between February and May 2012, a total of Shs 6, 453,367,101 was recovered from various enforcement interventions.
In Uganda, cigarettes, wines and spirits, polythene bags, garments, and hides and skins, top the list of most-smuggled goods. Areas where smugglers operate in order of frequency are the eastern region, central, northern and western Uganda.
Unscrupulous people rely on several methods - from outright smuggling to documentation fraud - to sneak in products. Under outright smuggling, people take advantage of un-gazetted routes and porous borders.
And in some instances, transit diversion of goods that are purportedly destined to another country, but dumped onto the local market without paying a single coin of tax. An example here is cigarettes.
Lately, smugglers have devised new ways of sneaking in products. These include dumping items in empty containers/compartments of fuel trucks, use of ambulances, concealing contraband in tinned milk or diapers to name but a few.
However, as the crooks' sophistication increases, so does URA's vigilance. Enforcement personnel have increased border patrol and surveillance of non-gazetted routes. This is complemented by impromptu spot checks along the gazetted routes.
Additionally, the enforcement teams physically escort transit cargo right from the port of entry until it leaves the country. This is meant to thwart any attempts of dumping.
The approach has reduced outright smuggling by 13%. However, there has been a downside, as the alertness has led to the emergence of "white-collar smuggling"-aforementioned documentation fraud - which accounts for 41% of customs offences.
Under this, goods are undervalued, misdeclared, underdeclared or misdescribed with the intention of paying less or no taxes. But the taxman isn't asleep! URA has increased capacity building of customs staff through several trainings like thorough documentation checks, intelligence gathering, valuation, verification and tariff.
Others are increased inspection of risk-based and intelligence-led high-risk consignments. Teams have also been trained in marine operations since Lake Victoria is a major smuggling route. Conducting of post-clearance audits has also helped to uncover valuation fraud.
To those, who cannot desist from such activities, the end is nigh and jail and or heavy fines will be unavoidable if found guilty. Under the East African Community Customs Management Act 2004, smuggling attracts deterrent penalties, namely a five-year jail term or a fine equal to 50% of the dutiable value of the goods or both and forfeiture of the goods involved.
Because we are all ultimately affected, smuggling should not be a one-man fight. All citizens need to be involved. It is for this reason that URA has created strategic partnerships with key stakeholders.
These include neighbouring revenue authorities, security agencies like the Uganda People's Defence Forces, the Police and private sector. Currently, there is joint border surveillance and sharing of information with neighbouring countries in addition to a quick informer reward process, which is helping in gathering of intelligence information.
Owing to the fact that some people do not know that it is a crime to engage in illicit trade, URA has increased and will continue educating and sensitizing the masses particularly those in areas where smuggling is rife.
The writer works with URA's Public and Corporate Affairs division.