Tax collection in limbo
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The BBMP is yet to decide on the methodology of collecting property taxes, says S. RAJENDRAN
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Bangalore is growing at an alarming rate over the past two decades and even as people are looking forward for a major infrastructure development to ease motor traffic congestion, the services rendered by the Bruhat Bangalore Mahanagara Palike are set to take a beating, given the nature of the opposition to the collection of property taxes.
In a welcome gesture, the Chief Minister, B. S. Yeddyurappa, in the budget presented to the Legislative Assembly on Thursday has provided Rs.1800 crore for Bangalore, largely aimed at infrastructure development. The budget allocation for Bangalore is unprecedented. Obviously, this has been done with an eye on the ensuing elections to the BBMP.
It is perhaps for the first time in the history of the Bangalore City Municipal Corporation that property owners keen on paying property tax are being turned away from the cash counters. The BBMP, thanks to what has been termed the political interface in the functioning of the civic authority, is yet to decide on the methodology of collecting taxes — whether it should be a Self-Assessment Scheme (SAS, a new format of the age-old Annual Rental Value system) or under the Capital Value System (CVS) which is in vogue across cities in the country and all over Karnataka as well.
Abeyance order
Much to the chagrin of the top bosses of the BBMP, the Corporation has been directed by the Government to refrain from collecting property taxes for the past six months. It was during the President’s rule in the State that the Governor, Rameshwar Thakur, directed the BBMP to suspend the collection since a controversy erupted over the introduction of the CVS. Following the direction of the Governor, the Commissioner of the BBMP, S. Subramanya, who has an open mind on the SAS and the CVS, issued an “abeyance order” to keep on hold the collection till the Government finalises the methodology.
Property taxes constitute one of the biggest revenues of the BBMP (nearly 90 per cent) and all civic works depend on this apart from the “doles” extended to the BBMP by the Government in the form of grants. In the Karnataka Budget presented to Parliament by the Union Finance Minister, P. Chidambaram, during President’s Rule, there was no mention of any grant to the BBMP unlike during the reign of the previous Kumaraswamy Government where Rs. 250 crore was given as grant for Bangalore civic works. Government grants are normally provided to the BBMP to help it in participating in centrally funded schemes such as the JNNURM (Jawaharlal Nehru National Urban Renewal Mission).
Measly sum
The total amount of property taxes collected by the BBMP in the last financial year was around Rs. 460 crore although it is quite measly compared to the property taxes generated even in smaller cities such as Nagpur and Pune, leave alone the other metropolitan cities. Of a total of nearly 10.50 lakh properties, only around six lakh pay property taxes since these are the only authorised constructions. The BBMP’s “Akrama-Sakrama” to regularise the unauthorised constructions is still on hold. The scheme was introduced about a year ago to enable the poor and the middle class to legitimise unauthorised dwellings.
A public hearing was organised by the BBMP a few days ago to finalise a system on collecting property taxes. Nearly 400 resident welfare associations were invited to express their views and this interactive discussion has, in a way, further compounded the problems of the BBMP. Most of the people expressed the view that the BBMP should revert to the SAS system of collecting property taxes which was in vogue between 2000 and 2003 when the S.M. Krishna Government was in power.
The BBMP is thus in a fix. It needs funds for developing a proper infrastructure and the Government has to focus attention on the State capital’s civic agency.
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