Revising vacant land tax
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The proposed Bill adopts a different rationale for calculating tax, writes C.H.Gopinatha Rao
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The Government of Tamil Nadu recently tabled a Bill to amend laws pertaining to the Municipal corporations and Municipalities. The purpose of this amendment is to provide for the levy of property tax on vacant lands which are not used exclusively for agricultural purposes and not occupied by or lies adjacent and appurtenant to buildings. This amendment would applicable to Coimbatore, Madurai and other district municipalities.
The method so far adopted is based on the capital value of the tax; instead what is proposed is that the vacant land tax be collected on a square feet basis. The minimum and maximum rates have to be fixed by the State Government. While charging on a square feet basis is less cumbersome, the problem is that it will not be in commensurate with the appreciation of land value.
For example a similar rule was proposed as early as year 2000 in the Tamil Nadu Urban local Bodies Rules. However this rule is under suspension and hence the new amendment. The table gives the rates fixed for Grade B corporations such as Madurai or Coimbatore.
These rates fixed in 2000 are now too low. They need to be revised periodically. If the tax is fixed as a percentage of the guideline value of the land as arrived at by the Registrar’s office, any revision at a later date would be easier.
Hence, whenever the guideline values are revised after a detailed survey and study by the Registration Department, the tax too can be easily revised without difficulty. . This will also help fix tax rates in commensurate with the market value. A system of rates without any such rational basis would not be useful on the longer term.
The author is former National President, Institution of Valuers.
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