Imposing land tariffs only increases exchequer revenues, and has no curbing effect on corrupt practices.
The recent increase in the land rates notified by the State Government of Goa do not serve to curb the practices of money laundering associated with sale of immovable property in the State of Goa,
The only plausible effect of the increase in the applicable circle rates of land for purposes of registration of a conveyance deed before the respective sub-Registrar Office is that it costs more to register the Deed.
There is no guarantee that land grabbing will stop in the State based on such uncorrelated measures being imposed by the government of Goa.
The three talukas which have witnessed a land rate increase are based on some imaginary yardstick that the demand was higher for land which could be acquired for cheaper and the new imposition of a higher land valuation by the revenue department would now ensure that the cost of acquisition becomes dearer thus denouncing corrupt practices from being effected.
The intention of the legislature in enacting revenue laws does not support the theory that an increase in land rates for the purposes of registration will have a controlling effect on the demand for immovable property.
In fact, from an economic perspective the theory of the law of demand elucidates that suffocating supply would only exacerbate the demand for a certain commodity. Immovable property being the commodity in this scenario.
Further examination of legislative intent within revenue law reveals that merely increasing registration rates does not align with a strategy to control property demand or regulate acquisition practices effectively. The economic principle of demand theory suggests that suppressing supply often intensifies demand for a given commodity, with real estate in Goa being a case in point. Consequently, inflating land tariffs may inadvertently amplify property desirability among high-income buyers who remain unaffected by registration costs.
Complementary theories supporting this analysis include:
A) The theory of economic elasticity in land prices indicates that increased costs do not proportionally reduce demand among affluent buyers, thereby failing to curb speculative transactions.
As a result, while increased tariffs may affect mid-income purchasers, those with substantial resources remain unaffected, perpetuating speculative transactions.
B) The theory of unintended consequences suggests that higher transaction costs may not deter corruption but could instead lead to more sophisticated evasion tactics to evade these fees.
Previous experiences suggest that when individuals face elevated transaction costs, they may resort to alternative methods to circumvent official processes, thereby contributing to a shadow economy that undermines the intended goals of such tariffs. Thus, heightened costs often foster evasion rather than compliance
C) The theory of rational choice posits that individuals engaged in corrupt practices weigh the costs and benefits; thus, unless penalties outweigh potential gains, behavior is unlikely to change.
Delving into the fields of criminology and economic policy highlights that measures focusing solely on financial barriers would not sufficiently impact those who engage in corrupt property transactions, as the perceived benefits often outweigh the imposed costs.
According to Petr Wawrosz in his journal article entitled: How Corruption Is and Should Be Investigated by Economic Theory (2022):
“Some authors (e.g., Golden and Picci 2005; Beber and Scacco 2012) argue that theory should turn its attention to the complexities of corruption and abandon the binary view and division that concentrates only on clear situations (for instance corrupt/non-corrupt, good/bad, ethical/non-ethical).
Corruption always occurs in a contextual environment. It is usually the consequence of many factors including individual traits, social norms and situations, the behavior of other people, and so on. It is often a symptom of other problems rather than the main problem.” (Wawrosz, 2022, p. 3).
Further, Wawrosz (2022) has explicated that:
Standard Economic Approaches to Corruption:
Aidt (2016) mentions that economics mainly investigates corruption from two approaches:
“The helping hand type of corruption: Corruption arises when a benevolent principal delegates decision-making power to a non-benevolent agent who commits corruption.” (Aidt 2016, p. 147). The approach can be called the principal-agent theory (agency theory) of corruption.
“The grabbing hand type of corruption: Corruption arises because non-benevolent government officials introduce inefficient policies to extract rents from the private sector.” (Aidt 2016, p. 147). (Wawrosz, 2022, p. 4).
Addressing land grabbing demands more than financial deterrents; it necessitates robust scrutiny mechanisms for prospective buyers, particularly those undeterred by elevated acquisition expenses.
Enhanced scrutiny measures targeting prospective buyers—especially high-net-worth individuals who remain largely unfazed by acquisition costs—could prove more effective.
Strengthening such due diligence frameworks may more effectively inhibit corrupt motivations underlying land transactions in the state.
Moreover, the comparative experiences of other regions have shown that combining financial controls with policy interventions focused on transparency and accountability can lead to more effective outcomes in reducing illicit property transactions. For example, studies on property regulation in emerging economies emphasise the success of integrating financial regulations with enhanced oversight mechanisms to better control speculative activities and reduce the scope for money laundering in real estate.
In conclusion, while Goa's recent increase in land tariffs undoubtedly contributes to state revenue, the impact on curbing corruption and unethical property transactions remains uncertain. Economic theories suggest that high transaction costs alone may not suffice to deter affluent buyers or individuals motivated by speculative intent. Instead, a broader strategy that includes enhanced buyer scrutiny and regulatory oversight may offer a more sustainable solution to address the complex issue of property-related corruption in Goa.
