Posted on October 16, 2010
Filed Under >Salahuddin Khan, Disasters, Economy & Development
38 Comments
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38 responses to “Doing Tax Reform Right: Think Big, Think Bold”

  1. Salahuddin says:

    Mahmood,

    As a follow on from my last comment, the prices of homes have nothing to do with the tax rate. The concept of ratable value is different from valuing homes through conventional real-estate valuation principles.

    The only factors would be (a) land area, (b) land use permissions and (c) land placement (one can imagine high value districts and low value districts and can easily define categories of placement e.g. Ultra-high, high, average, low, ultra-low) for each class of permitted use. This would set the rate on a very algorithmic basis having nothing to do with the ebb and flow of house prices, since we’re not talking about transacting home title transfers.

  2. Salahuddin says:

    Mahmood,

    A more in-depth reading of my proposed reform would have revealed to you that I do not propose a tax on homes. The property tax is on land and only if it is larger than a certain size which depends on the zoning for that land. Thus for residential land, the threshold might be one acre (a more in-depth study would yield a better view of this number) and since this is larger than most single-family residences it is not likely to hit poor and middle-class families at all.

    The proposal’s entire purpose is to bring many wealthy tax-avoiding (or evading) members of Pakistani society into a tax-paying condition, while leaving unaffected the majority of poor people, most of whom don’t have any land to their name.

  3. Mahmood says:

    Interesting idea and discussion. The importance of tax reform is clear and we need to think about this more creatively. Any solution should be simple and must also be just so that it does not effect the poor classes. I think this idea of taxing homes is not the best because homes are often the only investment for middle and poor classes and also the home prices which will be taxed can be very erratic.