IT was already an ignominious compromise by the government and now it too appears to have been delayed. As reported in this newspaper earlier this week, the revised tables for the valuation of property, which were to have been issued by the FBR for the new financial year, have not been approved or released. Officials suggest the delay is because the finance ministry has been sidetracked by the Panama Papers investigation and hearings in the Supreme Court. But other tax officials offer a more prosaic explanation: the main purpose of the valuation tables is to increase the revenue the government raises from the property sector, a goal that is opposed by powerful private interests. Given that the government has time and again reversed its decisions in the face of intense pressure from special interests in the economy, the combination of a centre facing political peril and trying to impose more revenue-raising measures makes for a vulnerability that is likely being exploited by the property sector.

Worth remembering is that while the government has reduced the property valuation tables to merely a revenue-raising measure, two of the three original aims were to deepen the documentation of the economy and drive property speculators out of the market. By raising capital gains tax on property that is rapidly bought and sold — the sign of speculators rather than genuine homebuyers — the aim was to rationalise property prices that have spiralled out of the reach of the middle, and even the upper-middle, class across urban Pakistan. But if official property valuations are kept artificially low the disincentive for speculators is not high enough to deter them from remaining in the property sector, ensuring that special interests continue to rule. That is also reflected in the kind of investments we see, with commercial projects taking precedence over the creation of affordable housing. The disservice to a growing population is enormous.

Four years into a government’s term, even without the political uncertainty that has engulfed the PML-N, few new ideas or measures have been unveiled. Election-year budgets are known more for populist measures than hard decisions regarding special interests in the economy. Eventually, however, this government or the next will have to make tough choices. The rate of growth in revenue is lower than the rate of growth of expenditure, a gap that will have to be bridged at the behest of IFIs that bail out the economy or because of simple budgetary logic. By caving in to special interests time and again, the government is making the state’s eventual task that much harder. A line will have to be drawn. Why not start with a property sector that if freed from the grip of special interests could have important benefits for swathes of the urban population?

Published in Dawn, July 27th, 2017