Economists flay Zardari’s proposal of flood tax on property

[Lahore_Real_Estate]

KARACHI: Leading economists have criticised President Asif Ali Zardari’s proposal of levying flood tax on property, saying that the government would lose credibility if it resorted to such measures.
“Foreign missions are donating to private social work organisations for helping flood victims instead of giving aid directly to the government,” said former advisor to the Prime Minister on Finance Dr Salman Shah.
This has forced the government to generate funds from local resources and proposal of imposing flood tax on property may be a part of it, he added.
In a meeting with Sindh’s government on Sunday, President Asif Ali Zardari proposed flood tax on both residential and agriculture land, directing the provincial government to generate one billion dollars through the levy.
Dr Shah said the government has set-up no agenda to spend the money on flood victims and rehabilitation work. “People would resist the initiative when the government has no plan for it,” he added.
He suggested the government should announce specific sectors where tax collection should be used. The proposed property tax would be for one-time only: Rs200,000 on a piece of residential land of 2,000 square yards, Rs100,000 on 1,000 square yards and Rs50,000 on 500 square yards.
Another economist said the measure would be an added burden on taxpayers who are already facing a deteriorating economy that has shrunk their earnings and enhanced inflationary pressure. “The government should not impose any tax that is passed on to consumers,” said Dr Ikramul Haq, a leading tax consultant.
He suggested that the government should consider levying a transitional tax. A small amount should be charged on transactions of property, motor vehicle purchase, etc. Asad Saeed, an economist, commented that there was nothing wrong in implementing property tax meant to help flood victims. “Collection should be
made equitable and all land-owners brought under the proposed tax net,” he said. He said the proposed tax would not have a negative effect on taxpayers. “Taxpayers only suffer from the production tax.”
The government is considering various measures to generate funds to help flood victims and rehabilitate economic life in affected areas. The government is also considering levying a flood surcharge on income tax at the rate of 10 percent for a period of one year.