The world Bank has now joined the protest against such practices. Abid Hasan, the head of the World Bank in Pakistan, told a one-day seminar in Islamabad last week while speaking on, “Administrative barriers to investment” that land acquisition and transfer was a highly tortuous exercise in Pakistan. He urged policy-makers to take major steps to remedy the situation.
Even otherwise, the issue has become important or the solutions urgent in view of the soaring prices of land and apartments from Gwadar to Islamabad and the major cities of the country. Properties quoted in lakhs of rupees until recently are now quoted in crores of rupees. Even the properties around Old Subzi Mandi have appreciated by a 100 per cent following the establishment of Askari Park there.
One of the reasons for the undue delay in the transfer of property is the prevalence of excessive corruption in this area. With the land prices up, the rate of bribes has also shot up.
The issue figured prominently at the one-day seminar organized by the Investment Promotion Bureau (IPB) and the Privatization Commission to remove the deterrents to foreign investment.
This is an issue in which the provincial government and the local governments are involved and they have antiquated laws in this regard that delays the process.
Now, the price of land in and around Gwadar is shooting up. A number of spurious agencies have sprung up offering land and apartments there. Federal social welfare minister Zubeida Jalal has expressed her shock by the frantic land-grabbing or spurious sale which goes on there. She wrote to the prime minister asking him to cancel all the allotments.
Now, the prime minister has announced that a major international airport would be set up in the Gwadar area. That should make more people interested in the area and they may want to set up their business there—legaly or otherwise.
The Gwadar Development Authority is the agency concerned with the development of the area and that is headed by the Balochistan chief minister Jam Yusuf. He should be taking steps to prevent the phoney housing agencies and housing societies. But he does not seem to be acting. Meanwhile, rockets continue to rain in the area but without heavy loss of life.
If the phoney developers and housing societies grease the palms of the local sardars and win them over, they can cheat a great many people and fatten themselves in the process. The government now talks of taking action against phoney housing societies. That has been said plenty of times before without any results. Let us see if it is going to be different this time. The minimum that can be done is to prevent such societies and groups from advertising the sale of plots and houses and collecting large sums from people and vanishing, leaving the large number of people duped and calling for relief from the government.
And now whether the acquiring of land is truly arduous or really tortuous, as the World Bank representative says, the Central Board of Revenue wants a large cut in the hefty capital gains for itself from the recent frenetic real estate transactions as tax.
The CBR chairman Abdullah Yousuf, always on the prowl looking for large chunks of revenues, has directed his regional income tax commissioners to meet the chief secretaries of the four provinces and seek their cooperation in collecting capital gains tax from the recent real estate transactions following the sharp rise in property prices.
The Regional Commissioner for Income Tax, Abrar Ahmed recently met the Sindh Chief Secretary Fazlur Rahman and told him that under section114 of the Income Tax Ordinance, owners of houses and flats and plots of 250 sq.yds. were liable to file income tax returns.
He requested the chief secretary to provide details of all property deals involving sales and purchase executed during the financial year 2004. He also requested the Sindh Revenue authorities to provide details of all such deals in future on a quarterly basis to enable the income tax authorities to pursue the potential tax payers.
The chief secretary offered the full cooperation of the provincial government and directed the Registrar of Properties to provide the required details.
Most owners of properties who have been buying or selling land at heady prices have been under the impression that such transactions are not taxable and so they are free to indulge in that freely and profit merrily.
The contrast is too much. While a clerk who sweats for a whole year and makes a lakh of rupees pays income tax, those who make crores of rupees through real estate deals or share transactions on the stock exchange do not have to pay income tax.
The World Bank, the Asian Development Bank and other donors have been urging that high economic growth and the sudden prosperity of some sections of the people should be reflected in the higher revenues of the country, but that has not been happening. Hence the government has to borrow more and more to finance development projects.
The other targets for tax collection are those who have invested in property in Dubai and Middle East, and those receiving large sums of money as rent. Evidently, the CBR intends to spread its tax net very wide. How much of success it achieves, it remains to be seen.
The prime minister says the government is sincere in its efforts to expand the housing facilities in the country. Apart from the benefit to the ill-housed people, that will increase the production of about 40 industries dependent on housing expansion.
The prime minister recently performed the ground-breaking ceremony to mark the inauguration of the development work in the D-12 sector which has been pending for the last 17 years. Along with that, three more sectors are to be developed which means there will be considerable house building activity in the capital city.
Along with that, interest rates for house-building loans are going up as interest rates generally rise and the banks are making their big killing. If along with the cost of land and building material, the cost of housing loans too rise, house building or buying will become too forbidding for the low and middle income groups.
A national survey conducted by the Federal Bureau of Statistics shows, there is no change in their economic conditions within a year. The Pakistan Social and Living Standards Measurements survey also show the living conditions of 23.9 per cent of the people have become worse in a year but the living conditions of 24.2 per cent of the people have become better or much better. That means the reality does not hold up to the claim of the government of the living donations of the masses improving. Only a quarter of the people have really benefited by the evident economic prosperity.