No, Mr Dar, an amnesty is not the solution!

The choice is yours, Mr Dar, this is a golden chance to save the country, please don’t waiver, please remain tough.

Shakir Lakhani July 16, 2016
Dear Mr Ishaq Dar,

It is reported that you have directed the Federal Board of Revenue (FBR) to call all stakeholders in the property sector to find a solution to a problem which is supposed to have been created by your government. What problem? Is it a problem to finally do something which should have been done long ago? It is in the supreme national interest to levy taxes on the actual value of properties, rather than on the (mis)declared low values.

To give just one example, in DHA Karachi, taxes were levied at the rate of Rs1,650 per square yard, while the actual price of the plots was Rs155,000 per square yard. Thus, on every plot of 500 square yards, the government was losing at least five million rupees whenever ownership changed hands. When you consider that there are millions of such plots all over the country which are sold and purchased, the loss to the national exchequer would be in billions every month.

There was a time when every man dreamed of building his own house during his lifetime with his savings. But property prices have multiplied manifold, so that it is now impossible for the common man to buy a plot and build a house of his own. Speculators have been manipulating property prices, which started escalating in 2003, when the value of a million rupee apartment suddenly rose to three million. After that, there has been no looking back, with prices of flats now being seven times they were five years ago. There is no way a lower middle-class family can buy a decent apartment now.

They will tell you, Mr Dar, that there will be flight of capital if the government sticks to its stand. They will say that there will be collusion between those evaluating property values and taxpayers, and thus the government will suffer. Please remember, Mr Dar, that flight of capital was taking place even when tax thieves were looting the country right and left.

They will ask you to declare a one-time blanket amnesty for this concealment.

Another amnesty, Mr Dar?

Concealment of income is a major crime and should be harshly dealt with. Don’t you know that after every such tax amnesty, the looters have been able to whiten their black money by paying only 2-3% on evaded income, and then they have continued evading taxes while poor honest taxpayers who have been paying up to 30% tax on their earnings look on helplessly? In the past, we have seen many such amnesty schemes, which only resulted in tax thieves enriching themselves by paying only 2-3% penalties on the looted wealth, while frustrated honest taxpayers seriously considered migrating to other countries where they wouldn’t be surrounded by thieves and criminals.

This country is embroiled in a war, Mr Dar. The nation needs every rupee it can get if the country is to be saved. Please enforce the law; please recover 30% of the concealed income from these dacoits. If you wish, you can exempt them from 30% penalty and two years of imprisonment for the moment. Just this time, Mr Dar, just once, punish them and give them with what they deserve, and see how these criminals suddenly become model law-abiding citizens for ever. The choice is yours, Mr Dar, this is a golden chance to save the country, please don’t waiver, please remain tough. If you give in, future generations will suffer and history will never forgive you and your government.
WRITTEN BY:
Shakir Lakhani Engineer, former visiting lecturer at NED Engineering College, industrialist, associated with petroleum/chemical industries for many years. Loves writing, and (in the opinion of most of those who know him), mentally unbalanced. He tweets @shakirlakhani (https://twitter.com/shakirlakhani)
The views expressed by the writer and the reader comments do not necassarily reflect the views and policies of the Express Tribune.

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COMMENTS (5)

Shakir Lakhani | 3 years ago | Reply | Recommend Even though the reforms have not yet been implemented, property prices have fallen by 30%. This proves that the government is on the right track. As for DC rates, everyone knew they were way below the market price, so why did people pay such high prices for plots and apartments? Because they had black money. The price of an apartment which should have been available for a couple of million rupees (which was itself higher that the DC value) was suddenly jacked up to more than twenty million rupees by manipulation (the way share prices are manipulated).
Patwari | 3 years ago Let's make it very simple. In layman's language. Dollar Dar needs to pay back the multitude of loans he got for his master. Nawaz. These loans never reach the common man. They are sitting in offshore accounts of the ruling cabal. Somehow Dollar Dar must raise the "ruppiahs' to pay these outstanding loans [at usurious rates] Might have been better if Dollar Dar had approached Bombay or Gujrati bunyas. They may have given better rates.
Leocibean | 3 years ago | Reply | Recommend You need to get your math right first, then do an analysis and then recommend something. Loss of PKR 5,000,000 on each property and then millions changing hands every year but for argument sake lets say only a million change hands would result in a loss of $48 Billion to the revenue of the FBR. Kindly keep in mind that the current budget (Entire) is based on $35-$38 Billion. Also, you are only counting Capital gain and not CVT, Stamp duty. All over the world the way the property market works is that as the value of the property goes up, the taxes on them go down and even then the overall tax collection goes up. by only increasing the value of the property and proportionally increasing the taxes will kill the volume and eventually kill the property market. Everyone is proposing going from one extreme to another.
Shakir Lakhani | 3 years ago Take the normal case of a transaction with actual value of 100 million but declared value of 1 million only. The "black" money in this case is 99 million on which income tax would be 29.7 million (30 %). I have taken 5 million as an average figure.
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