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No polls in sight, Stalin takes gamble of hike in property tax

Opp holds protests as DMK govt cites high inflation, dip in civic bodies’ revenues

Written by Arun Janardhanan | Chennai |
Updated: April 5, 2022 4:34:25 pm
Addressing protesters in the state Capital, party coordinator O Panneerselvam said the tax hike was a violation of the DMK’s poll promises. (Twitter/AIADMK)

Almost a year into its tenure and with no elections scheduled till the 2024 Lok Sabha polls, the DMK government in Tamil Nadu increased property tax in local body areas from April 1. On Tuesday, the Opposition AIADMK hit the streets across the state, including in Chennai and Trichy, in protest.

Addressing protesters in the state Capital, party coordinator O Panneerselvam said the tax hike was a violation of the DMK’s poll promises. “We will continue this until there is a rollback of the tax revision, people will be forced to take to the streets if such policies continue.”

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Though recommendations for the tax hike, including the ones proposed in 2013, were delayed over the years or stopped as previous governments refused to make a move that could be perceived as unpopular, the MK Stalin administration took the plunge with the larger aim of reviving the state’s economy and finances. The official statement announcing the tax increase explained that it was necessary because of high inflation and a dip in civic bodies’ revenue share.

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Tamil Nadu’s revised revenue deficit for 2021-’22 was Rs 55,273 crore as against Rs 58,692.68 crore the previous financial year. The latest Budget hopes to reduce it further to Rs 52,781.17 crore by increasing tax collection. The latest revision — the last one in Chennai Corporation happened in 1998 — will bring in additional revenue to local bodies, with Chennai Corporation alone expected to get an extra Rs 800 crore.

Different hike slabs

In Chennai’s core areas, residential houses smaller than 600 square feet will have to pay 50 per cent more in property tax while it is 25 per cent for other city corporations and the areas added to the Greater Chennai Corporation after 2011. Following this hike, a resident of a 600 sq ft home will have to pay Rs 1,215 tax, up from Rs 810. Officials claimed this was still lower than the property tax for a similar house in other cities —

Rs 2,157 in Mumbai, Rs 3,464 in Bengaluru, and Rs 3,510 in Kolkata.

According to the April 1 order issued by the municipal administration and water supply department, the hike in Chennai’s core areas will be 75 per cent for houses measuring 600-1,200 square feet, 100 per cent for 1,201 to 1,800 sq ft houses, and up to 150 per cent for houses 1,801 square feet and above.

Commercial structures and industries in core Chennai areas also face a 150 per cent increase in tax while education institutions will have to pay about 100 per cent more property tax.

A government official said only seven per cent of the 77.87 lakh houses in the state come under 100 per cent and 150 per cent slabs. Almost half the houses will face a 25 per cent hike.

Not apologetic about the decision to raise taxes, Minister for Municipal Administration KN Nehru said on April 2 that it was in line with the guidelines of the 15th Finance Commission and to meet conditions for receiving Central funds.

The same day, former Chief Minister Edappadi K Palaniswami warned that the government’s move “was just a trailer”. Sarcastically pointing out that the state administration had also failed to provide cash assistance to people during Pongal “probably as a reward for electing them in the Assembly polls”, Palaniswami added, “Many such bumper prizes are awaiting people in the coming days.”

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