Economics & Business

15% tax on rental income to hit traders, masses hard

ISLAMABAD: Ten percent additional tax on rental income in the budget will not only hurt the small traders and push prices further high but will strengthen the all-powerful real estate mafia.It is 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 & Malik Saghair Ahmed, Chairman Traders Association Blue Area in a joint statement issued here on Friday. After 10 percent revenue enhancement, the helpless consumers will be paying more percent 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 percent, due to 10% increase in tax. The counts 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 federal capital are already 15 to 20 percent higher as compare to other cities due to phenomenal increase in rents over the last five years which is due to the absence of any proper realty mechanism.

On the other hand volume of business has dropped by 40-70 percent owing to deteriorating economy with towering tariff of power and gas etc. “Small traders now find it increasingly difficult to keep prices stabilized. 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 which is freely operating with a powerful lobby behind it. This multibillionaire gang has pushed prices beyond reach and directly responsible for land scams and housing crisis in Pakistan.

On the other hand, department formed to discourage cartels lacks teeth, muscles and determination. Realtor-friendly officials are also playing their role. The mushroom growth of multinationals, banks and financial institutions has also played a negative role by paying 300% in rents & advances for 5-10 years and hiring buildings on exaggerated rents.

Some banks and retired officials are also reportedly milking masses as they have stepped into the lucrative real estate business with billions of their disposal and those who opened shops in Islamabad decades back are now finding it difficult to continue. “There is no fare rent control mechanism in Islamabad like other provinces there fore it should be amended or a ‘Rent Stabilization Board’ should be formed,” said Malik Sohail Hussain

Successive Governments only raise slogans for small traders and use them for long and quick marches and to foil shutter down calls by opposition but always put its weight behind business tycoons and they are left high and dry. Govt recently said that a new Rent Control Act for the capital city has been approved by the law ministry and is due to be placed before parliament for approval. The present democratic Government including Prime Minister Yusaf Raza Gilani and Federal Minister Naveed Qamar should do something about it to prove that this government is different. “This will win them support of over 15,000 small traders,” assured Hussain.

In practice, the Ordinance has been counterproductive and rentals are now unaffordable for many commercial properties and in case of litigation, the tenant is usually on the loosing end; summary evictions are ordered. Islamabad needs law that is simple, clear, easy to implement and enforced. A committee should be formed comprising all stakeholders comprising landlords, tenants, business chambers, and Government officials to hammer out the issue and provide equal protection to property-owner and tenants.-SANA

About the author

Rubab Saleem

Rubab Saleem is Editor of Pakistan Times

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