Pakistan Planning Commission chalks out strategy for revenue and economic overhaul

[TopCat]

Pakistan cant increase tax revenue manifold in short duration. VAT might help a bit but not much. 9% of the GDP is not that bad compred to other south asian nations. What Pakistan need now is Fiscal management and try to increase the tax revenue in a long term basis.

 

[TaimiKhan]

Taimi if your father cant affords to live in the area he bought the house in should not be the governments or municipalities problem if he cant afford it he can sell and move to the areas where he will be able to afford the property tax in the mean time after selling the property he will have a good return on his property.

Most property in Pakistan is sold on speculation i bought it for this much and i will sell it for this much period fine if you can find a buyer who is willing to pay the price more power to you it should not become Governments problem if the person bought more then they can afford .simply put it if people cant afford to pay the high prices demanded by property dealers and flippers and they have to pay the tax on the property while they sit on it they will simply come back to planet earth and start to bring prices down to where they should have been from the day one.

I am using your post just for example and it's not an attack on you or anybody else and i hope you understand that and if i have offended you my sincere apologies.

Well yeah it did not only offend me, but the thousands of people who may go through this dilemma if people like you come and start running the affairs of this country and the valuable advice which you just gave is implemented.

Did you even understand the issues which are in such cases or how many people would suffer ?? Did my dad or people like my dad who bought homes for themselves to live in ever dreamed that property prices will go up so drastically or were these people doing the speculation business ?? Is it their fault that they bought the houses to live their retired lives with peace at cheap rates and then one day people like you come up and tell them to get out of the peaceful communities you are living in and go to some slum in the city and live there. How will that feel if it had been you ?? Did you thought by trying to be in someones shoes who gets retired and then finds some contractual job with no benefits and without his involvement in this speculation by people his house price goes up and then one day people ask you to give this and this much tax or else should vacate / sell the house and go to a slum and live there.

And what about those people who may have gotten their houses from their parents and they earn 40-50K salary, what if it had been you, you get a 1K home worth 10M from your dad, and you earn a salary of 40-50K with a family of 3-4 people minimum, can you be able to pay a tax of 200K per year ?? I hope you do live in Pakistan and know about the inflation and sky high prices of food items and utility bills that people go through, the school bills, the other expenses. So now, what are you gonna do, sell your house given to you by your parents and go to some area which is insecure and not worth to be lived in. Was it your fault ?? Did you bought the home with your money ??

I hope you have not gotten offended, rather taken the issue more seriously and consider the implications seriously for the people who bought these house at cheap for making it a home to live in and not for speculation business.

As said, there are many other things which the govt can do, to make the taxation base expanded, thus revenues going up.

You can tax those people who own more then one house, tax the people at the prices they bought the homes as that would give an idea who has what money, if someone bought the house for 10M, it means he has money, tax him, if some poor middle class person got this home when they were cheap or he got it from his parents, then check his income and tax accordingly.

Income is the real factor which can tell us who should be taxed how much, not a home which was bought at cheap prices in the past or inherited houses.

Tax the agri sector, tax people houses who have more then one house in their names, tax the shop keepers, retailers, traders, merchants, industrialists who don't show their real incomes and pay less taxes, tax the politicians sitting in the parliament who give no tax or such low tax, that people get ashamed of hearing about it.

If these above steps are implemented, i can assure you, we would be self sufficient for years to come.

 

[TaimiKhan]

Taimi, unfortunately this is the way property taxes work around the world. However, property taxes are frozen after the owner enters a certain age range so that taxes don't continue to increase when the earning potential of the individual has diminished, or the individual has retired. With that, your dad would have had his property taxes "locked" when he passed age 50 so property appreciation after that time would not matter to him.

Also, as Cheetah said, if property has appreciated so much don't think of your father as a middle income individual. He is actually rich since his property has gone up so much. It's just that the bulk of his money is invested in a passive, non-income generating asset. Sound asset allocation would dictate that he move to a different, up and coming area which is cheaper and take the extra money from the sale of his existing property and use it to augment his income.

Sorry tech, this once again is a very absurd idea, that people should move without even having done anything wrong or played any role in the property boom. People should understand first the reasons for the property boom, it was not the fault of a common man who bought houses as homes when prices were cheap, they bought to live in them not do business or thought that when prices will go up, they will sell it and go somewhere else. Why should they ??

People buy homes after looking at many factors, security being one. Why one would sell a house at some secure location which he bought a decade ago and move to some new slum or a place which has no security or has other drawbacks.

And such people are considered middle class people, no matter what is the worth of the property they live in, had he to his name another property or some other properties, then you can say he is not middle class person, but has sizable wealth as he has investments.

A person living in his own home bought at cheap prices or inherited does not makes him a rich person.

As said, such issues need attention and should be looked minutely as who is rich and who isn't.

Rich has no worries about his utility bills, school bills, children taught at the elite schools, kitchen expenditure, expensive cars, no medical bills worry and other stuff, which define a rich person.

Someone who sits in a 10M home which he did not bought at 10M, has worries for his kitchen expense, medical expense, children school bills, children studying at some normal schools, and all other worries are for a middle class or poor person.

So, hope you can have a better and different definition for rich, middle class and poor people. As home worth isn't one nor the right one.

 

[SandsofTime]

Taimi, unfortunately this is the way property taxes work around the world. However, property taxes are frozen after the owner enters a certain age range so that taxes don't continue to increase when the earning potential of the individual has diminished, or the individual has retired. With that, your dad would have had his property taxes "locked" when he passed age 50 so property appreciation after that time would not matter to him.

Also, as Cheetah said, if property has appreciated so much don't think of your father as a middle income individual. He is actually rich since his property has gone up so much. It's just that the bulk of his money is invested in a passive, non-income generating asset. Sound asset allocation would dictate that he move to a different, up and coming area which is cheaper and take the extra money from the sale of his existing property and use it to augment his income.

I would be offended if I were forced to relocate because this property price bubble artificially inflating the prices. People want to live in peace and not move here and there again and again once prices start shooting based on speculation. Many people in Pakistan inherit the home from their parents. This property tax you are proposing is going to hurt the middle class the most as home is the biggest investment for any middle class family. This tax is regressive and hurts the lower classes. The rich can stash away their cash in other assets but middle class will have to leave their homes. At best this kind of tax should only be levied on secondary homes and land holdings other than primary residence.

 

[Luftwaffe]

For example, there are no property taxes of any consequence in Pakistan.

I paid 16000/Rupees Property tax last year for 1 Kanal house in Peshawar.
You know what that house was in my father's name who transferred it to my mother who is now a widow, she would have easily not given tax because there is no tax on widows but she transferred it to me and I am paying taxes as I should even though I know the taxes are too high. Isn't 16000 rupees outrageoous house tax my brother has filed appeal under what law and what exact amount is for a 1 Kanal tax and amazing they would sending you to different offices to find out yourself such frauds!.

The Fact is as much money government collects as much money fills their bellies.
The truth is "adat sey majboor" begger politicians have another new way of generating income. I'm not blaming the whole political lot.

Instead of Flood Taxes, a road tax should have been increased so those people who own 2-3-4 cars will need to pay more yearly and where they can spend easily 5000/- on patrol per month they can pay yearly road tax as well.
Taxes or fines like anyone who breaks traffic rules regardless of poor or rich he/she'll pay in as in the West.
And while they quickly passed the bill for this flood tax, why not list all companies, financial institutions and registered money changers to pay those taxes.

Why not order all bureaucrats and politicans who are getting paid high, to use their own cars instead and those fuel allowances be stopped, why not president and prime miniter houses expanses be slashed. If indian president has a pay of 1,50,000.00 why not president of pakistan get this much pay instead he gets paid God knows in millions. What a liar nawaz sharif is he paid no tax as is in the record and he comes on tv telling anchor he paid 50 million rupees tax.

 

[PakiiZeeshan]

^^^ I'm soo happy i don't have to worry about these thing...yet

 

[TechLahore]

Very surprised by the reactions here. For one, people refute that the FMV of the property they own is their wealth. Comments above suggest that the value of your property should not be considered wealth. I find this utterly illogical. In every country of the world, under every system of personal wealth assessment, the value of assets you own - including your property - makes up your net worth.

As for not requiring people to move, people have to move anyway due to speculative property bubbles. Ask anyone who once had a home in Gulberg. The entire area, pretty much, has been commercialized. I think there are two or three residences left on the Main Blvd, one owned by Drs. Mubashir and Shabbar Hasan, one by Khurshid Kasuri and maybe a couple of others. That's it. When Gulberg was built, almost the entire Main Blvd was residential.

When your country has 1.8-2% population growth and packs in 180 million people in a relatively small area, and also faces ridiculously high countryside-to-major-city immigration levels, then unfortunately the "sanctity" of residential areas will eventually be compromised. Also, I think it is a bit much to complain about the troubles associated with moving when the only reason for the move is that your *own* property has grown in value by leaps and bounds. Are we now complaining about making money? If you sell a highly appreciated piece of property in Defence, Model Town, Gulberg, etc. you won't exactly be moving to a "slum"

 

[faisaljaffery]

According to latest estimates Pakistan's total population is 180 million and there are only 2 million income tax payers in this country of 180 million. One can imagine that how responsible Pakistanis we are. Most of the income tax payers are salaried individuals. Why our business class is not paying their due taxes. why these politicians having billions of property do not pay any taxes. there is a loby working in Pakistan which is not allowing taxing agriculture sector. IF this single sector is taxed Pakistan's tax revenue will increase considerably. There is a need for tax reforms in Pakistan and wealthy people need to be taxed through legislation process. tax evaders should be given serious punishments this will only pave way for betterment of Pakistan's economy.

 

[Abu Zolfiqar]

tax collection rate in Pakistan is beyond PATHETIC (approx. 9-10% --low by even developing country standards)

Hillary Clinton is absolutely correct when she berrates Pakistan (especially the elite) for not owning up and taking charge.


I would also propose V.A.T. though it is such a political move and will obviously cause irritation to the large industrialists. Such an imposition has been spoken about for quite some time, though no concrete steps have been taken


the 'glitches' which somebody brought up in this thread should be corrected; but Pakistanis regardless of wealth need to get their acts together


tax evaders should be thrown in prison and their assets confiscated.....time to raise the stakes


in a country like Pakistan, even a tax collection rate of 30-35% would make HUUUUGE difference

there should also be a way to bring informal sectors into mainstream economy so that it can be properly assessed, documented and taxed as well --though this is only wishful thinking and almost impossible to implement at this time

 

[sparklingway]

We had wealth tax till 2003, when it was removed by Shortcut.