Real estate challenge
FORMER FBR chairman Shabbar Zaidi’s assertion that real estate is ‘the parking lot’ of untaxed or dirty money is not a new disclosure. Nonetheless, his claim that he was summoned by the evidently displeased (former) army chief when he attempted to take measures to tax real estate transactions and stop the business of ‘plot files’ to discourage people from hiding their illegal money, shows the extent to which the security establishment is invested in this sector — through housing development projects under the DHA brand in major cities of the country. It is common knowledge that Pakistan’s business elite, bureaucracy, politicians, judges and other affluent sections have been the biggest beneficiaries of the unregulated and undertaxed real estate sector. No wonder, every government has encouraged the investment of dirty money in real estate through multiple tax amnesties, in addition to heavily subsidising investors by not regulating and taxing them — at the expense of the economy’s organised sectors.
Besides causing massive tax revenue losses to the national exchequer, the unregulated real estate business is responsible for several other serious issues facing the country as well. For starters, it is a major cause of unplanned urbanisation that has eaten into swathes of prime fertile agricultural land. Land prices are artificially inflated by developers through the sale of unregistered plot files that have acquired the status of a private parallel currency, making housing inaccessible to low- and middle-income segments of the population. It is also one of the main reasons for the increasing inequality in society. Additionally, the real estate sector forms the bulk of the country’s informal economy, the size of which is estimated to be somewhere between 30pc and 50pc of the documented portion of the economy. It would not be wrong to assume that no effort to reform the nation’s flawed tax system and document the economy can succeed without first making it impossible to park one’s dirty money in real estate assets.
Published in Dawn, March 14th, 2023
Potential flashpoint
AS a recent American intelligence assessment affirms, the subcontinent remains a major potential flashpoint for conflict, with Kashmir and militancy being the primary factors that may spark a conflagration. However, this does not have to be a fait accompli. As the recent diplomatic breakthrough between Saudi Arabia and Iran — brokered by China — shows, even the most intractable foreign relationships can be managed positively if the parties are willing to bury the hatchet, and if non-aligned actors help prepare the groundwork for peace. As mentioned in the Annual Threat Assessment of the US Intelligence Community, though the ceasefire along the LoC is holding, India is likely to respond with military force “to perceived or real Pakistani provocations” while “unrest in [held] Kashmir or a militant attack in India” are listed as potential flashpoints for a conflict. While the report may overplay Pakistan’s alleged support for cross-border militancy, and underplay India’s belligerence towards Pakistan, there can be little argument with the fact that the Kashmir dispute, and the toxic Pakistan-India relationship, can transform into a conflict. The report also seemingly reinforces former US secretary of state Mike Pompeo’s claim earlier this year that Islamabad and New Delhi came close to a nuclear exchange in 2019 following the Balakot episode after both sides believed the other was about to deploy its nuclear assets.
Managing this difficult relationship is demanding, but not impossible. Ideally, Pakistan and India should strike a deal in which the interests of both are protected. As India’s late envoy to Pakistan Satinder Lambah recalled in his book, a meticulously discussed peace pact is ready and all it needs is approval from both capitals. It may be useful to revive this document and use it as the base for discussions. Immediate steps by the two states can include restoring diplomatic missions to full strength, and easing the torturous visa process for divided families. But serious dialogue can only begin when a new government takes power in Pakistan, and a fresh administration takes the reins after India’s elections next year. In the meantime, away from the public glare, backchannel talks can always take place based on the China-Saudi-Iran model. For this to succeed, both countries will need to agree on a neutral interlocutor with international standing to help broker a deal. Once significant progress has been made, the deal can be made public.
Published in Dawn, March 14th, 2023
Shameful conduct
The Toshakhana saga has taken another sordid turn after the release of department records from 2002 to 2022. Though most of the public’s attention thus far had been focused on expensive watches received and sold by former prime minister Imran Khan, the released records have now shone a spotlight on other prominent leaders’ practices as well.
From a cursory look at the document provided, it appears that almost no leader who served in an official position during this 20-year period thought it unfair to take advantage of the privileges of their office to procure for personal use various invaluable objects at throwaway prices. Even politicians who otherwise insist that their vast wealth is purely generational had no qualms about paying pennies on the dollar for items they should easily have been able to afford on their own.
The situation is even more contemptible if one considers the fact that the practice of gift-giving at the official level almost always involves a quid pro quo. If our officials received gifts, they also gave items of considerable or even comparable value away. However, the gifts presented by our officials were not paid for with their personal wealth but from public funds. Therefore, would retaining gifts for a small fraction of their value be justified, considering that it was the public which was actually footing the bill for such exchanges?
This and similar questions are being asked as citizens parse the Toshakhana records. It is, indeed, a great service to the public that a part of them has finally been released. However, as the Lahore High Court also asked yesterday, what of the pre-2002 record? And why are some stakeholders continuing to insist on withholding information relating to who it was who gave these gifts? Why does the public not deserve to know these facts?
The state’s caginess suggests there are things it still wishes to keep hidden from the public. The demand for a record of gifts given to various judges and military officers, reiterated yesterday by the PTI, also remains unanswered.
It would be in the interest of transparency and accountability that the public knows how leaders have been benefiting from their offices. There should be pressure on the government to tighten the Toshakhana rules to prevent any more personal enrichment at the cost of the state.
The released records have raised an important question: how is the value of each gift assessed, and by whom? Greater checks and balances are needed so that each item can be valued fairly, perhaps by an independent expert who is free from pressure. Only items that are perishable or of no consequential value (when fairly assessed) ought to be allowed to be kept. Anything else should be retained only in lieu of full payment.
Published in Dawn, March 14th, 2023