FEDERAL Board of Revenue (FBR) has decided to increase property valuation rates from the 1st of August 2023 by thirteen to fifteen percent, along with the expansion of cities covered, under the World Bank’s loan conditions. The number of cities where the hiked property valuation rates of the FBR would be notified would be increased from 42 to 51. While the move aims to boost revenue and address tax evasion, it is important to carefully examine the pros and cons of such a change in rates.
Raising property valuation rates can potentially lead to higher tax revenue for the government. By accurately assessing the value of properties, the FBR can ensure that property owners contribute their fair share of taxes. This increased revenue can be utilized for public welfare, infrastructure development and social services. In many countries, under-reporting of property values is a prevalent issue, leading to tax evasion. By revising the property valuation rates, the FBR can reduce the scope for under-reporting and encourage property owners to declare the true value of their assets. This step would help combat tax evasion and promote a more equitable tax system. We appreciate any step aimed at avoiding tax evasion. An accurately valued property market can foster investor confidence and attract both domestic and foreign investment. Higher property valuatin rates indicate a healthier real estate market, potentially stimulating economic growth. Increased investment can lead to job creation, improved infrastructure and overall economic prosperity. While a higher property valuation rate might be beneficial for the government, it can impose a burden on property owners which may disproportionately affect lower-income property owners, potentially exacerbating income inequalities. This will also result in increased property prices, making it more challenging for individuals to afford homes. This situation can particularly affect first-time homebuyers, hindering access to affordable housing and potentially contributing to social inequality. To mitigate the negative consequences, the FBR must ensure transparency, fairness and accountability in the valuation process. Striking a balance between revenue generation and protecting the interests of low income groups is crucial to achieve the desired results from increase in property valuation rates.
