Govt mulling to impose property tax in next budget

ISLAMABAD: Government is seriously considering imposition of property transfer and capital value taxes in the next budget, it was learnt here Monday.

Brokers community has been demanding from the government imposition of property transfer and capital value taxes in the past that was not met.

However, financial team of sitting government has indicated to impose these taxes in budget of next fiscal year.

Proposal of imposition of property transfer and capital value taxes was discussed during a meeting of economic advisory council chaired by Minister of Finance Syed Naveed Qamar.

According to the sources, during the same meeting officials also considered to enhance tariffs over luxury cars and other luxurious items. The economic advisory council meeting would set development projects priorities for the next fiscal year it has been learnt.

It is pertinent to know that brokers community is perturbed over declining turnover at the country’s bourses mainly due to booming property business and recently imposed taxes on the stock exchanges, saying the government should levy some kind of a tax on transfer of files of the plots prior to actual allotment.

Several stock brokers said not only investors at the stock exchanges but other high net individuals are preferring to invest in property business mainly because there is no proper check or any kind of tax on the sale and purchase of files of the plots prior to actual allotment.

These provisional files of plots provide immense opportunity to investors to earn quick money, as investors are selling files after making a booking in new property schemes.

Brokers community indicated that it would welcome the decision of imposition of property transfer and capital value taxes in the next budget. They cited most recent examples like Bahria Town phase 9 Islamabad at which builders of the housing scheme received Rs three billion as payment of just one installment.

But brokers said unhindered transfer of files, just to earn quick money, without any check and balance may hurt government efforts to boost construction industry.

“It’s all happening openly without any check and balance due to which land mafia is boosting prices and construction industry will not benefit from it,” a broker from Islamabad stock exchange told the Post requesting not to be named.

He suggested prices of plots would start coming to real level as soon as the government impose at least 10 percent capital value tax or withholding tax on every sale and purchase of plot and on the commission of real estate agents.

He said this would help the property business as imposition of these taxes would discourage speculation and only genuine buyers will enter into the business. Brokers said imposition of capital value tax on the shares trade has affected trading volumes at the country’s bourses due to which investors’ attention has been diverted to property business.

Source, The Post, 20/5/2008