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Pakistan will forgive tax evaders if they invest black money in Imran’s govt housing scheme

Pakistan will look the other way if people invest black money in construction projects such as PM Imran Khan’s Naya Pakistan Housing Program by 31 Dec.

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Karachi: Pakistan is willing to forgive tax evaders if they help fund activity in the economy that shrank for the first time in seven decades last financial year.
Authorities in Pakistan, where just 1% of the population file tax returns, will look the other way if people with illicit cash — locally known as black money — invest in construction projects such as Prime Minister Imran Khan’s flagship Naya Pakistan Housing Program by Dec. 31, according to the Federal Board of Revenue.

“There is all this money with developers who have been doing tax evasion and small scale projects,” Zaigham Rizvi, member of Naya Pakistan Housing Program taskforce, said in an interview. “I support the decision to bring funds from the dark economy into the tangible economy. Construction will generate some sort of tax directly or indirectly if that money is put through the value added system.”

With revenue collections slowing amid the coronavirus pandemic, Khan is trying to tap illegal wealth that’s estimated to be as large as 56% of the $278 billion economy. The government this year cut the budget for development spending and has little recourse to raise money after taking bailout funds and an emergency loan from the International Monetary Fund.

Amnesty for tax cheats can help muster funds needed to spur housing activity in a nation where mortgage finance is almost non-existent. The government predicts 400 billion rupees ($2.4 billion) of home constructions will start this year, according to Minister for Information and Broadcasting Shibli Faraz.

Pakistan has forgiven tax cheats earlier as well. Four of the past governments have announced such programs at least once, but none have been successful in drawing out significant amount of black money.


Also read: Pakistan chuckled while India clashed at LAC. Forgot how China nibbled at its borders too


Million Homes

Khan’s amnesty program is the first for the real estate sector as he’s in dire need of cash and ways to stoke gross domestic product, which contracted 0.4% in the year ended June. Lockdowns to slow the spread of Covid-19 — the nation is the second-most infected in Asia — and locust attacks, are sucking state funds.

Khan’s Naya Pakistan Housing Program aims to build 1 million homes each year. For investors to benefit from the amnesty they will have to register with tax authorities. Registrations began this week.

“It obviously raises questions, given the previous discussions with IMF,” which dislikes tax amnesties, said Mattias Martinsson, chief investment officer of Tundra Fonder AB in Stockholm. “These are special times and everyone understands that. Countries like Pakistan don’t have the pockets of the U.S. or European Union.”

Still, the program’s dependence on illegal cash may not be enough. Investment into homes will pick up when incentives such as cheap mortgages and tax savings for first purchase house are introduced, according to analysts.

Pakistan’s bank have extended home loans to about 100,000 customers to date, with about half of those taken up by employees, according to Ali Khizar, head of research at Business Recorder, a local newspaper.

“The priority people have is to spend on basics necessities at this point, not buying a house,” said Khurram Schehzad, chief executive officer at Karachi-based advisory Alpha Beta Core Solutions. “You need to really incentivize people to spend on houses at this point in time.” – Bloomberg


Also read: Imran Khan govt bans PUBG citing ‘anti-Islam material’. His youth base won’t have any of it


 

 

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6 COMMENTS

  1. Why countries like Pakistan and India are dubbed third world countries. Only in nations like these are where criminals are ‘rewarded’at the expense of genuine citizens. India is no exception. Encrochers are regularised, loan defaulters are pardoned, criminals can fight elections from jail, poor goes to jail and rich gets bail, and no political leader can be convicted no matter how serious a crime be.

  2. Being basically a pragmatist Imran Khan is courting funds from every side be it internationally established one from the IMF or internationally hoarded one like expatriate black monies. This clearly fits in the pragmatic and Islamist environment that is the present Pakistan. If this dispensation can deliver the required welfare and housing reliefs then the Pakistani elites can justifiably continue postponeing the implementation of true Islam !

  3. Magnificent and sincer move.. at least
    If Modi can beg people to leave subsidies why not Khan…
    And what if the same black money is received by cracking it down, still it is to be used for the development of a country, so the opportunity given to the illegal cash is justified..

  4. IF THE PRESENT DISPENSATION DOES SOME THIN LIKE THIS IT WILL BE
    MODI – MODI -MODI ACROSS THE OPPOSITION.

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