The World Bank (WB) has estimated that the tax potential of the real estate sector in Punjab province is Rs.400 billion which can be materialized through digital land records.
According to a World Bank report, a transparent system of centralized cadaster-based land records has strong potential to support the ecosystem for revenue enhancement in Punjab.
The World Bank estimates Punjab’s tax potential at Rs. 400 billion, with the largest revenue potential in Services Sales Tax, Urban Immovable Property Tax (UIPT), and stamp duty. Of the three largest sources, two are related to real estate, according to the report.
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The UIPT is collected by the Excise and Taxation Department (E&TD) and the stamp duty by the Board of Revenue (BoR). Improved land record system will provide the underlying data to conduct systematic analysis informing policy measures, enhance coordination between the two land-related tax authorities (E&TD and BoR), and improve implementation of UIPT and stamp duty.
The report says that the urban housing gap in Punjab is expected to reach 11.3 million units by 2047, driven by population growth, migration from rural areas and deterioration of the existing housing stock. Between 2 and 2.5 million units are expected to be constructed in Punjab under the purview of the Punjab Housing and Town Planning Agency.
Pakistan’s mainland records are maintained at the village level by the provincial Boards of Revenue (BoRs). The BoRs maintain a Register of Deeds that registers property transfers and mortgages. The Record of Rights and the Register of Deeds are person-based records, but the Cadastral Maps have provided a survey number as a common identifier.
The BoRs’ Revenue Records were originally rural records and excluded the historical city centers. As urban areas have expanded, unplanned large urban areas around the city centers have been covered by Revenue Records. Cantonments, Housing Development Agencies, and Cooperatives maintain their own records on land plots, properties and rights in the areas of their respective jurisdictions and provide land registry services to owners, banks, and others.
The semi-public land records are not reflected or interlinked with the Revenue Records or the Excise and Taxation’s Urban Immovable Property Tax (UIPT) records. There is no single agency maintaining updated land records for all of Punjab, and the coordination of record-keeping functions carried out by the various agencies is limited. Punjab has over 200 standalone land records systems covering urban properties.
The report said that due to the absence of a standardized system of recording property rights in urban areas in the province, the following challenges persist including property tax evasion and inequitable taxation, non-availability of formal ownership records, lengthy dispute resolution and litigation processes, overlapping record registries in multiple agencies that lack harmonization and lack of easy access to property rights information for development authorities and agencies to fulfill their core functions.
The women in urban areas also face marginalization and the loss of inheritance rights to land due to the lack of clarity on property ownership, limited access to land-related services, and cultural restrictions.
Both the federal and provincial governments recognize it will not be possible to achieve the Naya Pakistan Housing Program’s goal of constructing up to 2.5 million low-cost housing units in Punjab if the province’s urban land record challenges are not resolved. To help for dealing with the issues, the World Bank will give $150 million for the project the “Punjab Urban Land Systems Enhancement Project”. The project has four components.
The World Bank will provide $103 million for digital land records and cadastral maps for Land Records Management and Information Systems (LRMIS). The Bank will also give $3 million for Land for Housing to support the identification, evaluation, and mobilization of low disaster risk public lands for climate-proofed development programs, including resilient housing.
The World Bank will also provide $35.5 million for Integrated Land and Geospatial Information Systems and Services to support the establishment of a modern Land Information System, which unifies and integrates rural and urban land records. The Project poses moderate environmental risks and high social risks. Environmental risks stem from the construction or expansion of Arazi Record Centers (ARCs) and the provision of ICT equipment for ARCs, said in the report.
