Real estate valuation has made headlines this past month. And for good reasons too, provided one looks at the bigger picture.

The real estate sector is indeed Pakistan’s very own home-grown Panama. As Nasim Beg of Arib Habib Group recently put it, the property market is a reservoir of un-taxed black money, including money belonging to criminals, which represents dead and unproductive capital.

One of the many ways these untaxed money are generated in the economy is smuggling, and the still flourishing informal worker remittance economy.

According to the Tax Reform Commission’s final report earlier this year, the foreign exchange earned by Pakistani expatriates is estimated to be $40 billion per year; of which only about half is remitted through the legal channels. Moreover, it is also alleged that “approximately $20 million are daily smuggled from Pakistan through the outgoing passengers from the Pakistani airports.”

In the context of former, TRC’s findings are equally daunting. The report says that about $3.5 to $4 billion worth of goods are smuggled via Afghan border. Similarly, petroleum products, plastic materials, carpets etcetera are smuggled from Iran and their worth are about the same amount i.e. $3 to $4 billion. Then there is smuggling of gold, alcoholic beverages, fabrics, cigarettes, electronic goods and parts of worth about $3 to $4 billion smuggled from UAE through boats. All these are, of course, over and above the under invoiced or mis-declared goods imported from China which are reportedly to the tune of $3 billion.

According to the famed analysis by Tariq Huda, Collector of Customs Preventive (Karachi) the total revenue lost on a handful of smuggled commodities under investigation during the calendar year 2014 alone was about $2.6 billion, with the value of smuggled goods estimated to be around $9 billion.

And all that money is untaxed, undocumented and mostly parked in real estate.

The point is that getting the property valuation right is just one end of the stick. Unless the grey economy is reduced, the smart untaxed money will find one way or other to cheat the system, or even beat the system by way of political wrangling and negotiations with the government on notions of pragmatism and ground realities. And the poor and under privileged citizens at large – of which Pakistan has no shortage — will remain the end losers.