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'15pc tax on rental income to hit traders, people hard' - Naveed Yaseen - 06-22-2008 09:11 AM
Islamabad: Ten per cent additional tax on rental income in the budget will not only hurt small traders and push prices further higher, but will also strengthen the all-powerful real estate mafia.
It is the duty of the government to protect people from inflated and uncontrollable business costs by providing equal opportunities to property owners and tenants, said Malik Sohail Hussain, VP National Traders Alliance & former SVP Islamabad Chamber of Commerce & Industry, and Malik Saghair Ahmed, Chairman Traders Association Blue Area in a joint statement.
After 10 per cent tax enhancement, the helpless consumers will be paying more on everything they buy. It has already started a new round of confrontation between landlords and tenants, which will end up in litigations as many owners are now asking to vacate the premises or increase rent by 20-30 per cent, due to the 10 per cent increase in tax.
Courts will be overburdened by the decision if not reversed, as Pakistan is already No 2 in the world as far as the cases are concerned, said Malik Sohail Hussain, adding that it will also cause unemployment and unrest.
Prices of common items in the federal capital are already 15 to 20 per cent higher as compared to other cities due to the phenomenal increase in rents over the last five years, which is due to the absence of any proper realty mechanism.
On the other hand, the volume of business has dropped by 40-70 per cent owing to deteriorating economy with towering tariff of power and gas etc. “Small traders now find it increasingly difficult to keep prices stabilised. They are frequently charged for artificial price hike by the civil society,” said Hussain.
One of the main reasons is the top guns of realty mafia, who are freely operating with a powerful lobby behind it. This multi-billionaire gang has pushed prices beyond reach and is directly responsible for land scams and housing crisis in Pakistan. On the other hand, the department formed to discourage cartels lacks teeth, muscles and determination.
The mushroom growth of multinationals, banks and financial institutions has also played a negative role by paying 300 per cent in rent and advances for 5-10 years and hiring buildings on exaggerated rents. “There is no rent control mechanism in Islamabad like other provinces. Therefore it should be amended or a ‘Rent Stabilisation Board’ should be formed,” said Malik Sohail Hussain.
http://www.thenews.com.pk/daily_detail.asp?id=119847