IT is becoming a pattern with this government to first announce a sweeping ‘documentation’ measure that sounds novel and innovative, then negotiate with the stakeholders at whom the measure is aimed, and finally settle, in return for some revenue, on an amnesty scheme of some sort. It happened with the retailers, and now it has happened again with the property market. To be sure, there was a great deal of scepticism when the finance minister first announced in the budget that he wanted to abolish the practice of undervaluing property transactions and bring this sector under the tax net. When we heard that an independent panel of valuators was going to conduct the valuation of each property transaction, it appeared that he might be serious, although it strained credulity even at the time to think that institutions such as the State Bank, SECP and FBR could take on a monster as large and powerful as the property market.

But then, the wheels of the property market jammed up in July, and remained stuck ever since. Property dealers were unwilling to submit their true valuations before the state, arguing that independent panels have in the past been associated with massive corruption. Attempts by the government to negotiate new ‘valuation tables’ for every property in the country were the first sign that its will was cracking. The exercise was absurd to begin with. How can one have a table listing the “true value” of every property in the country? And how often would these tables be updated, given the volatilities of the market?

Once its will cracked, it was a slippery slope towards the same exit option that the government has taken in every similar exercise ie an amnesty scheme. And now we have one, in the form of an amendment to the Income Tax Ordinance, 2001, that grants amnesty from investigation into the source of wealth with which the property was originally purchased against a payment of 3pc tax on the difference between the DC and FBR rates. The technicalities blur the truth here. The government has essentially proved once again that under the garb of a novel ‘documentation scheme’, it was, in fact, pursuing nothing other than a few morsels of revenue. Why did the government allow itself to feel so pressured by the property speculators? How does a prolonged slump in this sector affect the smooth functioning of the economy? It had no disruptive impact other than pricking the property bubble for a few months. With the latest climbdown, it has now been established that a revenue-hungry government has run out of ideas on tax reform, and is pursuing every bit of incremental revenue by cutting deals with holders of black money.

Published in Dawn December 8th, 2016