Last year, the ruling PML-N initiated reforms aimed at revaluating property prices in Pakistan’s major cities. This revaluation would revise upwards the value of property while ensuring that no tax evasion takes place in the real estate market. Recently, the Federal Board of Revenue (FBR) announced a rescheduling of this property revaluation.
A revision of property values is highly needed in Pakistan. Presently, property rates are determined by the Deputy Commissioner of a district and are far below their actual market price. This allows property holders to register properties at the rates fixed by the Deputy Commissioner, while selling property at the actual market price. This has led to a huge divergence between the actual income and stated income from these sold assets. For instance, some properties in DHA Karachi are valued at Rs 1,650 per square yard while the market values them at as much as Rs 15,5000 per square yard.
Alas, this revaluation, like many other initiatives, has fallen prey to politics and to vested interests. While sources claim that Finance Minister Ishaq Dar had asked the FBR not to start revaluation given that the Bureau is occupied with the ongoing Panamagate scandal, it is difficult to not see the role of influential landholders and investors in stalling the revaluation. Indeed, when the scheme was first announced last year, private real estate owners lodged a protest with Dar and lobbied the government to backtrack on this initiative. As a result, the housing market in Pakistan took a plunge with prices falling nationwide.
It seems the powerful business lobby has won this round. Sadly, this is the reality of any democracy that promotes the interests of the few over the many. We hope the PML-N will rethink the delay in revaluating property and taxes in the real estate market. The country is in dire need of this reform.