The Pakistan Economy Watch (PEW) on Sunday praised Finance Minister Ishaq Dar for taking steps to regulate the realty market which will help government raise billions of rupees and increase the size of documented economy.
The decision was being resisted by majority of the business community which amounts to help tax cheats as it will convert a good part of the informal economy into formal one which is in the larger national interest, said a press release issued on Sunday.
PEW President Dr Murtaza Mughal said that Pakistan’s real estate sector has become a save heaven for corrupt bureaucrats, politicians, criminals, terror financing and crook businessmen. He said that formal economy is shrinking since decades while the informal economy has been expanding over time and now it is bigger than the formal one.
Mughal said that the finance minister’s decision will increase the tax-to-GDP ratio which is one of the lowest in the world.
A study estimated that the underground economy is 54.6 to 62.8 per cent of the GDP and is expanding at the rate of 9 per cent a year. According to that report, the informal businesses enjoy cost advantage by avoiding taxes and regulatory obligations which allow them to remain competitive despite low productivity, the PEW president said.
“The informal segment of the economy does not pay direct taxes which limits the impact of policies and weakens resource base of the state,” he added.
The PEW president called for ending the culture of amnesty schemes as each amnesty is declared to be the last, but the count keeps on growing.