Crisis and opportunity.

AMONG the works of some historians, one can find a crisis-centred view of large-scale transformation. The argument is that moments of great crises - natural calamities, wars and famine, and economic breakdown - often precede substantial changes in the way states operate and how societies progress.

In the midst of a major cost-of-living crisis in Pakistan, various economists have urged the current government to make the most of these adverse circumstances to induce long-standing corrections in the way the economy is governed. These include the removal of blunt, untargeted, and regressive consumer subsidies - such as the one on fuel, electricity, and gas prices; and the transfer of various rents and tariff-based protections offered to domestic industries, that have rendered much of Pakistan's manufacturing economy uncompetitive on a global stage.

Alongside these familiar, expenditure-related steps, there is also advice aplenty on improving the revenue side of the equation, by rationalising the tax base, making some sectors pay their fair share, and reducing the disproportionate burden that falls on low and middle-income citizens by way of indirect taxes.

Perhaps the most salient advice circulating, and one that generates considerable consensus among policy researchers at least, is the need to change governmental regulation around land. This would involve some combination of increasing the quantum and coverage of property taxes on built properties in first- and second-tier cities to bring them closer in line to comparable cities across the world; a second intervention would be penalising the hoarding of vacant land (ie the use of empty plots as a store of wealth) through an annual tax; and a third one would be to increase tax rates such as CGT and stamp duty on the transaction of property to curtail speculative trade in plots and files. This can be done in tandem with increasing the assessment rates of property through the DC and FBR tables of valuation for provincial and federal government taxes respectively.

The next 18 months are looking bleak for every rural and urban household, except those in the top 5pc of the income and wealth distributions.

The change of regulations around land, and the expenditure reforms mentioned earlier, essentially target the overall structure of the macroeconomy. The notion behind this is that once these basic macroeconomic fundamentals are put in place, the country will be on a more sound footing to pursue...