BUREAUCRATS in the Brihanmumbai Municipal Corporation (BMC) find themselves divided over the Shiv Sena’s proposal of waiving property tax for residential properties measuring up to 500 square feet and giving a 60 per cent concession in assessment for flats measuring between 500 square feet and 700 square feet, a move recently approved in the general body meeting on July 6. Even though the proposal has the support of all political parties, it will need the civic administration’s response before the state government can take a decision on it.
Civic officials pointed out that while the majority of the city’s taxpayers fall within the category of properties measuring up to 500 square feet, the taxes collected from them comprise a small percentage of the total revenue generated by property tax. “There are about 15 lakh houses which may be entitled for a complete exemption from property tax and the funds collected from them amounts to around Rs 350 crore. Even though the amount is not big in comparison to the total revenue of Rs 5,100 crore generated by property tax, with Octroi gone, it would definitely be a loss of revenue for BMC,” said an official from the Assessment and Collection department.
Apart from the concern over losing a portion of its revenue, senior civic officials said that the pros and cons of the proposal have to be weighed before the civic administration takes a stand. “About 90 per cent of the people paying property taxes fall in the category of properties upto 500 square feet. Many of them live in slum structures or cessed buildings and are currently not paying any taxes. By not implementing this proposal, we are taking away the incentive from them to move out of dilapidated buildings and opting for re-development,” said the official.
On the other hand, the senior official pointed out that implementation of such a proposal will create an unequal burden on the smaller percentage of people who own properties measuring more than 700 square feet. “Despite being a secular tax, by removing 90 per cent of the taxpayers, we will be generating the revenue by burdening the remaining 10 per cent of the city’s population. Citizens are entitled to services since they pay taxes. But with this rule, people who are not paying taxes will continue to reap the benefits which is unfair,” said the official. He added that a decision will be taken after conducting a risk assessment including the financial implications of the proposal.
Political parties, however, expressed their support for the proposal and argued that the loss of Rs 350 crore will have no impact on the civic body’s revenue while the exemption would bring relief to the poor in the city. Referring to the fixed deposits of the country’s richest civic body, Leader of Opposition and Congress corporator, Ravi Raja said, “The BMC has deposits worth Rs 65,000 crore in the bank and gets an interest of around Rs 4,500 crore. As the richest civic body, it can give some relief to the middle-class people of the city,” he said. He added that Congress will also oppose the long-pending proposal of imposing property tax on slums on similar grounds.
Standing by the party’s stand, leader of the house and Sena corporator Yashwant Jadhav said, “The property tax waiver comprises a small portion of the taxes and will not affect the revenue much since majority of the taxes come from owners of larger properties who can afford the amount. The BMC can easily recover the cost by increasing the taxes for the commercial sector at a later stage,” he said.
The party had made the promise to waive the property tax before the civic elections held earlier this year. Referring to possible misuse of the proposal when implemented, MNS corporator and group leader Dilip Lande said, “There may be a small percentage of people who will try to misuse the exemption. But the BMC needs to be strict about allowing people to join multiple flats. They shouldn’t allow people to break the walls when they come to ask for permission.”
The proposal passed by the general body has been sent to the municipal commissioner and the civic administration’s suggestions. The proposal would be deliberated yet again in the general body meeting. After a mutual agreement, the proposal will be sent to the state government and the Urban Development department will eventually take a decision on the matter.