Promotion of low-cost housing schemes: Abad proposes government finance with nominal mark-up

Association of Builders and Developers of Pakistan (ABAD) has proposed the government to provide housing finance with nominal mark-up to promote low cost housing schemes. The budget proposals of ABAD are strongly advocating the builders' problems, which they have been encountering for years.
ABAD in its budget proposals suggested the Federal Board of Revenue (FBR) not to impose Capital Gain Tax (CGT) on landed property as it is provincial subject and not covered under the Income Tax Ordinance 2001. It also expressed fear of drastic decline in remittances, saying that the CGT would lead to create confusion for Pakistanis living abroad in making investment in real estate.
It also recommended that new and used construction machinery including tower cranes, batching plants, elevators, generators, solar panels and allied equipment for self-generation of energy, equipment related with water treatment and reverse osmosis should be tax exempted for the approved construction projects and housing schemes. It said that the Capital Value Tax (CVT) should be abolished or amended in a manner that did not burden the lower classes while providing relief to the privileged class.
It advised the board not to impose Value Added Tax (VAT) on the real estate sector as the inputs used in construction are already being taxed. And these taxes are paid at the time of purchase. Additional paperwork associated with the VAT will surely make things more cumbersome.
The ABAD said the performance of the HBFC, which was established to extend financial support to the low and middle income segments of society, has failed to entertain the masses in the last year. The present expensive and inefficient top management has derailed the corporation by not disbursing house finances to the eligible loan seekers. Therefore, it is proposed that the authority concerned should take remedial measures to improve its performance.
It said the top management of HBFC, should be replaced by knowledgeable and competent officials and funds of the corporation may be utilised for the achievement of its objectives at low mark-up rates. It also recommended the government to promote public private partnership for low cost housing schemes and the land in this regard should be allotted at subsidised rates to the members of ABAD with reliable credentials. Furthermore, it urged the authority concerned to take positive measures to evolve an effective mechanism to prevent cartelisation especially, in cement sector.