THE government’s ham-handed efforts to extend the tax net to the sale of property and gain revenue has resulted in a stalemate. By pretending to take on powerful vested interests with an ill-conceived plan the government may unwittingly be allowing those interests to further entrench themselves in business.

Recently there was an advertisement that claimed that the returns on property in DHA city Karachi had risen 400 per cent in the last two years.

As a layman in such matters, I find it difficult to comprehend such phenomenal returns on money put in property in such short a period. While the plots remain vacant and no value has been added, prices keep on escalating as advertised. At a recent seminar in Karachi, information was shared that Phase eight in the DHA which was started some 28 years ago, still remains bare.

This is how the rich park their funds in land without any hassle or risk involved. The rich continue buying and hoarding land in the name of so-called investment. Later they sell it off at a higher price, collecting huge returns, which goes un-taxed as it is hardly reflected in the figures for the revenue authorities. In some cases, the black money is whitened.

The government was therefore right in bringing about an amendment to section 68 of the Income Tax Ordinance 2001. It seems the government has yielded to the pressures of the land mafia and the amendment will most likely be annulled.

Muhammad K. Sufi
Chicago

(2)

THIS is with reference to the article, ‘Real estate: boom or bust’ (July 26). Federal finance minister Ishaq Dar in his wisdom has upset the apple cart and brought the real estate and construction industry to a grinding halt. On the advice of the IMF, First World rules have been stringently applied to a Third World country without taking the stakeholders into confidence.

A country where less than one per cent of the population pays direct income tax, a large percentage is exempted from income tax and filing IT returns.

Prices on real estate will indeed come down but so will the revenue earned by the state on stamp duty, gain tax, CVT and other heads, as people will find other means of transacting business. Foreign investment will be throttled and Pakistanis’ money will flow to the Gulf countries as never before.

A more gradual approach, such as doubling the different taxes, would have been absorbed by the industry willingly and the government’s revenue would have doubled.

The evaluation of properties in 18 cities of Pakistan will open the floodgates of corruption. Pakistan, which is already near the bottom of the Transparency International index, may drop another few places.

The government is advised to scrap the amendment and do its homework before dropping any bombshells.

Asif Jah
Karachi

Published in Dawn, July 29th, 2016