ISLAMABAD, AUGUST 19: The Asian Development Bank (ADB) has recommended that the Pakistani government remove the tax breaks granted to the real estate industry in order to “improve revenue collection.”
The “Pakistan National Urban Assessment” study, released by the bank, exposes mismanagement across multiple industries.
The study states that the ADB recommended imposing property development tax and “ending” the tax exemption on open plots after six years. The bank noted that the drop in investment in the manufacturing and agricultural sectors is caused by the tax exemption on real estate development. Investment in manufacturing and agriculture is lacking, which inhibits productivity and growth.
The bank asserts that the sale and investment of real estate should be subject to a standard tax. It further stated that tax breaks for real estate development rob the government of income.
According to the ADB analysis, investors choose the real estate sector because of the tax exemption.
Reforms to the electricity and water supply are recommended in the report. Better energy use in the water supply and transportation systems should be addressed.
According to the ADB, Pakistan’s population boom warranted the exploration of alternate energy sources.
It emphasized the need of a water resources management strategy to give people access to clean drinking water and recommended sanctions for water waste.
The research notes that transportation and solid waste management systems need to be reformed in order to accommodate urban growth.
