Anwar Iqbal writes in Dawn: Pakistani-American economist Atif Mian urges that the government should shift its focus from non-reproducible to reproducible factors.
Atif Mian’s Talking Points:
“Land is one of the favourite assets through which the powerful extract rents from the economy.”
“Even if the means to acquire land by the powerful are legal, it does not necessarily make them desirable or fair. “In fact, the entrenched nexus between power and plots in Pakistan is seriously damaging the economy.”
“The power-plot nexus has led to a high-consumption, low-productivity economy.”
“Pakistan generates one of the lowest shares of revenue from land and property — both as a share of GDP and as a share of total tax revenue…this is “inefficient.” “increase property tax to address this issue.”
“Despite extreme pressure due to the fiscal deficit, the recent budget protected property sales by army personnel and bureaucrats from taxation.”
Pakistani investor Maaiz Khan:
“Raising property tax could be “an unpopular position because it would disproportionately affect the elite.”
Atif Mian on Power Sector:
Pakistan’s entire power sector has become a “zombie sector” that is “sucking the blood out of the rest of the economy”.
Pakistan is selling electricity at one of the highest prices in the world —about 21 cents per kWh (including taxes) — while the sector operates at a loss overall.
The actual market price of electricity should not exceed 8-9 cents per kWh, but “the government is charging an exorbitant price to keep the zombie alive.”
“Three practical ways to raise revenue through land value: auctioning public land in a competitive bidding process with proceeds going to public funds; pricing the increase in market value from up-zoning and directing the proceeds to fund public expenditure; and taxing a fraction of the market value of the land on an annual basis.
Excerpt from the report in Dawn >
