KARACHI: State Minister for Finance Rana Muhammad Afzal Khan has assured the Association of Builders and Developers of Pakistan (ABAD) that despite some reservations on recovery under Fixed Tax Regime (FTR) for construction sector, he will take into consideration the proposals forwarded by ABAD regarding FTR in the next budget as $8 to $10 billion, out of $18 billion of remittances, are being invested into real estate sector. He also clarified that Regulatory Duties on raw materials have been withdrawn.
While addressing a meeting at ABAD House here on Wednesday, the State Minister said that ABAD should focus on low-cost affordable housing as the common man’s dream of having a home is becoming a distant reality. He assured that Construction Policy will be formed with the consent of ABAD and proposal of ABAD regarding FTR will be included in the next federal budget after discussion and if these proposals are deemed applicable. He admitted that subsidy on the import of machinery has widened the budgetary deficit.
He said that tax recovery from the construction sector is very low, which is not acceptable and builders and developers should pay taxes accordingly, which is in the interests of both the government and builders and developers. He said that it will be impossible to hide black money after Pakistan has signed OECD agreement regarding money laundering. He told that the government is striving to broaden tax net and after the adoption of forensic auditing of taxpayers, no one will be able to remain out of the tax net.
Rana Afzal Khan said that it is the only construction sector where the ratio of value addition is the highest in comparison to other industries. He said he wants that a share for the poor should be added into every project and the government will provide every support to ABAD for construction of low-cost housing. He said that we should minimize lack of confidence and the government will take ABAD into confidence for forming policies.
The minister said that the association should raise voice against the corrupt officers as the time has come when no corrupt element should be tolerated any longer. He said that the government could not fulfil its promise of providing Rs500,000 low-cost houses for poor as the government had to pay more for the security of the country. But, he continued, the government will bring next budget politically motivated which will provide relief to common men.
Earlier, ABAD Chairman Arif Yousuf Jeewa said that budgetary proposals from ABAD for next budget will be sent to the government by next week. The ABAD has taken into account interests of all stakeholders of construction and real estate business in these proposals, he said adding that Fixed Tax Regime (FTR) was a very good scheme by which government could have realised a huge amount as the tax but the Federal Board of Revenue did not allow this scheme to move further. He said that builders had paid more than Rs500 million as 5 per cent advance tax after approval of building plans under the FTR. If this amount is multiplied by 20, the government could have realised Rs10 billion of tax under this scheme, he said adding that ABAD is ready to re-discuss FTR with the government. He said that FTR was brought to minimize person to person contact for wiping out corruption but this was not acceptable to FBR officials.
He said that Regulatory Duties are imposed to protect local industries and we are not against protecting local industries but builders were unable to buy steel bars just after imposition of RD and later on steel bars were being sold at the rate of Rs84000 per tonne, which was Rs72000 per tonne before imposition of RD. Now the same stuff is being sold at the rate of Rs92000 per tonne. On the other hand rates of tiles and sanitary items were also increased despite the fact that there was no new tax imposed on these items, which is very strange because there is no precedent of increasing rates when local industries are projected by the Regulatory Duties. He categorically said that local steel industries have recorded boom during the present government which is evident from emerging of new steel industries in Faisalabad and Islamabad.
He requested to the minister to abolish the three-tier system of property valuation before announcing any Amnesty Scheme for real estate sector. He said that in the case of universal property valuation provinces and the federation will get 1 per cent tax each.
He said that ABAD has introduced Affordable Housing Scheme on the basis of no profit no loss as its Corporate Social Responsibility for those people who are unable to purchase dearer properties and ABAD has received more than 85 thousands applications for these schemes in Islamabad and Karachi. He said that ABAD has acquired land for this purpose and we wish that the government provides utilities and infrastructural facilities.
