EDITORIAL: The cost of capitulation

EDITORIAL: The recent volte-face by the Federal Board of Revenue (FBR) on property valuations in the Islamabad Capital Territory is not merely an administrative misstep. This, in fact, reveals a snapshot of the deeper malaise that increasingly appears to afflict Pakistani officialdom. Decisions with far-reaching consequences are pushed through in apparent isolation with ground realities and the likely public response, only to be hurriedly withdrawn once the inevitable backlash erupts.

Last week, the FBR had imposed extraordinary valuation hikes – ranging from 87-168 percent in the DHA areas – barely a year after the last upward revision here. Elsewhere, the increases veered into the absurd, soaring by 900 percent in the C-sector and an astonishing 1,250 percent in the F-sector. The exercise laid bare a conspicuous deficit of basic logic, proportion and administrative prudence.

That these inexplicable increases were imposed in a depressed real estate market – where the FBR already levies withholding taxes ranging from 4.5-11.5 percent on property sales and 2.5-18.5 percent on purchases – made the move even harder to defend.

The uproar across the federal capital’s business community, real estate sector and among ordinary taxpayers was swift and entirely predictable. The valuation table was flatly rejected and the Islamabad Chamber of Commerce and Industry (ICCI) announced a protest demonstration and sit-in outside the FBR House on December 22 unless the notification was withdrawn. Faced with mounting pressure, the tax authority issued a fresh notification, conceding the validity of the business community’s concerns and suspending the earlier order.

As the ICCI President Tahir Mahmood noted, the tax body’s poor judgement and administrative incompetence had effectively frozen property transfers, leaving the national exchequer with virtually zero tax collection over the past several days.

This sequence of events raises an obvious question: did the FBR genuinely fail to anticipate the outrage such disproportionate increases would provoke, or did it proceed regardless, knowing it would eventually retreat? Whatever the case may be, those responsible for such rash, ill-thought-out decision-making need to be made accountable for this gross ineptitude.

While this particular FBR notification disproportionately raising property valuations was clearly unjustified, it still underscored a highly troubling pattern: the government now retreats even on legitimate actions, trapped by the dangerous precedent set through yielding to public pressure over prior ill-conceived decisions.

Through various acts of omission and commission, it has steadily incentivised nuisance value as a negotiating tool, with various vested interests having learnt that the merits of a case matter less than the volume of protest: raise a hue and cry, paralyse economic activity, threaten street agitation, and the government will blink. This culture has taken root precisely because officialdom too often introduces measures without adequate planning and foresight, leaving itself little choice but to back down eventually.

The recent transporters’ strike is an apt illustration of the government’s weakened hand. Despite the Punjab authorities having accepted some of their demands, the protest continued, suggesting that transporters are intent on having all their demands met, justified or not and the government, true to past precedence, buckled as the chairman of the Transporters Alliance announced that the government had accepted all their major demands.

This newspaper had earlier called on the authorities to adopt a balanced approach when negotiating with the transporters, addressing their reasonable concerns but without compromising on long-neglected road safety.

The longer term damage of this pattern of reactive decision-making will be severe unless policymakers start basing their decisions on foresight, rigorous planning and considered analysis.

Otherwise, every reversal will only end up empowering disruptive actors, undermining policy credibility and reinforcing the image of a government adrift in ill-conceived choices.

Copyright Business Recorder, 2025