Finance Minister Muhammad Aurangzeb on Saturday reiterated the government’s commitment towards structural reforms, saying it would not support the ‘plots and files’ business, a speculative practice prevalent in Pakistan’s real estate sector, calling it unsustainable.
“We are all with the construction industry, but we need to differentiate between real estate and construction.”
“The government will not support the plots and files business,” he said, adding that it is not sustainable.
The remarks were made at the “3rd All Pakistan Chambers Presidents Conference” at the Faisalabad Chamber of Commerce & Industry (FCCI) on Saturday.
A ‘plots and file’ business refers to a real estate practice, primarily prevalent in Pakistan, where individuals buy and sell “plot files”, which are essentially documents representing a future piece of land within a developing housing society, rather than the actual plot itself; meaning you purchase a “file” that gives you the right to a plot once the land is developed and allocated through a balloting process, allowing for potential profit by selling the file at a higher price before the plot is physically available.
Addressing concerns about Pakistan’s reliance on the International Monetary Fund (IMF), the finance minister said “It is often questioned why we keep going to the IMF.”
“The reason is that we have not implemented the structural reforms needed to change the DNA of the economy,” he said.
Aurangzeb noted that a tax-to-GDP ratio of around 9-10% is not sustainable.
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“In a country of 240-250 million people, if only a certain percentage are paying their taxes progress cannot be made,” he maintained.
“Hospitals and education can run on charity, but the government cannot,” he said, adding that the government intends to raise the tax-to-GDP ratio to 13.5% to achieve economic sustainability.
The finance minister highlighted that retail, wholesale, real estate, construction, and agriculture sectors must contribute to the tax system.
He informed the government intends to simplify the tax filing process.
“By the time we get to September, 80-90% of the salaried class will be able to fill their forms online, without a need of tax advisor or lawyer,” he said.
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He urged the attendees to actively participate in the government’s privatization process.
“Next week we will start doing a stock take on who has recommended what, how we will take it forward, and what we can do in the context of a Fund programme”, reaffirming that Pakistan must “stay with the IMF programme”.
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