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Pakistan needs simple property tax formula

Pakistan needs simple property tax formula

Pakistan is the country with severe shortage of housing. Housing shortage has reached an alarming mark of 10 million. Pakistan needs 1 million new houses every year to cover the housing need, but we are building just 3-4 lac houses every year.

To solve this housing crisis in Pakistan government of Punjab has started Ashiana Housing Scheme. But this housing scheme is just for lower-middle class people. Secondly, Ashiana Housing Scheme is not on a vast scale to help general public, especially poor people. To solve housing crisis in Pakistan we need radical changes. Pakistan needs to collect revenue to be spent on housing.

Due to housing shortage we can see slum dwellings in every city of Pakistan. Pakistan is a nation where 40 million people have no access to toilets. Many houses have no proper wash rooms or kitchens. Millions of houses have passed their useable age and should be demolished to build modern homes.

Property tax in developed countries

In developed world, property tax is applied according to the value of houses. In UK, there are different categories for tax, like 2.5% tax on luxury properties worth more than 1 million pounds. Similar to UK, all developed countries have some sets of property taxes. This property tax is used to provide housing benefits to homeless people.

A simple property tax is what we need in Pakistan

The government of Pakistan has recently imposed tax on properties. According to new law people have to pay up to 35% tax on properties. This is too much and according to real estate experts, this will stall the real estate sector in Pakistan that is already stagnant. Pakistani government should not impose life time fix tax on properties but annual property tax like western countries.

In Pakistan we need very simple and basic tax. We should divide people into two categories, homeless people and home owners. There should be a simple tax of 1% on residential and commercial properties. If we calculate total properties in Pakistan including houses, shops, offices, agricultural land and industrial properties, the sum is more than 50 million. If we collect 1% annually as tax, Pakistan can collect $100 billion. This amount is enough to start housing projects in Pakistan for the people who cannot afford to buy houses.

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