Real estate boom   

SUKKUR: This is apropos the ongoing issue of taxing profits from the over-Rs7-trillion-worth real estate business and its contribution to the black economy, with devastating consequences of hindering investment in industry. Like any other invention, the system of governance evolved for developing countries, where state revenues generated from taxes levied on the earnings of citizens — irrespective of sources of livelihood — have funded human resource, research and development projects. The countries that follow universally adopted systems constitute the First World, while those who deviate from it, comprise the Third World. The infrastructure of roads, energy generation, public transport, health, education, airports, policing, judiciary, emergency services and regulating industries can only be maintained and built if taxes are collected in proportion to earnings by citizens, without any exceptions.

The real estate and housing industry can thrive only if infrastructure like roads, bridges, electricity and other utilities, including provision of security through law enforcement, can be sustained from tax revenues generated by this sector and not diverted from other sectors. You cannot have housing, education and facilities in posh residential areas comparable to those existing in developing countries, but have tax free amnesties and schemes that are typical of the Third World. These disparities breed discontent and enable growth of terrorism.

It is not the destiny of this country to be relegated forever to the Third World, nor was it the vision of the Quaid-e-Azam that the affluent elite get all amenities, benefits from welfare allotment through state subsidised housing schemes, and yet pay the least amount of money in taxes. Investors earning crores of rupees from real estate sales would like to buy luxury cars, have their children educated abroad, and maybe even seek foreign nationalities, but are not willing to part with 10 per cent of actual profits in Pakistan. Nonetheless, they are willing to pay over 40 per cent in Western countries.

Black money is being parked in real estate and will continue to be so as long as profits are not taxed. This investment, while beneficial to individuals, does not generate employment in proportion to the amount of money invested in it. In any case, the existing waiver of tax exemption on profits earned from real estate retained by an investor for over five years is discriminatory since no such benefit is given to professionals, traders, scientists, economists and other professionals.

Aneela Chandio

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