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Political one-upmanship over property tax may cost BMC dear

Thursday, March 15, 2018
By Steffy Thevar

Although the CM and all the city councilors have responded positively toward waiving off property tax for homes above 700 square feet, the real question arises that who would fill in the massive financial loss that the civic body would face after this decision. Experts say if this proposal is passed then, Mumbai will become the first city in the world to exempt property tax for over ninety per cent of its citizens

After the split between Shiv Sena and BJP, both the saffron parties are busy taking credit for all the good that the Brihanmumbai Municipal Corporation (BMC) is doing. While earlier last year the Sena tried to exempt property tax for those with home up to 500 square feet, the BJP is now trying to push this limit to 700 square feet.

The CM said on the floor of the house that the government is positive on exempting property tax and the decision over the limit will be taken by the municipal commissioner which will be backed by the state government. However this political gimmick will cost the civic body to lose about 90 per cent of the income source from property tax, if senior civic officials are to be believed.

The officer also added that if this proposal is passed then Mumbai will become the first city in the world to exempt property tax for over ninety per cent of its citizens.

The civic body revenue has been falling short of collecting revenue. Since the abolition of Octroi which has been replaced by the central government, the civic body is now dipping into its reserves. Property tax is the second major source of revenue for the civic body after the development charges (Fungible Premium).

The civic body has fallen short of collecting more than Rs 1,000 crores in case of development charges while in case of property tax there has been a shortage of collection worth Rs 250 crores from the target meant for this year.

The total income of property tax for 2017-18 was pegged at 4,958.25 against the budget estimate 2017-18 of Rs 5205.03. A higher official said, “If the civic body waives off property tax for houses measuring up to 700 square feet then this would mean waiving off the tax for about 90 per cent of the house holds in Mumbai.” He also said that if this is what the civic body does then it would become the first city to do this.

An official said, “Anyone owning a house more than 700 square feet is rich in the city. Most of  the houses measure not more than 400 or 500 square feet. Should we tax only the wealthy one per cent?

When questioned on what about the Rs 10,000 pending property tax dues which the civic body has failed to recover from defaulters, the official said, “Out of the 10,000, 5,000 is disputed and even in the case of the remaining 5000, about 2000 are disputed in the lower courts. In case of remaining, there are internal inquiries pending on property taxes worth Rs 1,300, the remaining we are collecting on a daily basis.”  

According to the procedure to make a change in the property tax, the general body had passed a notice of motion (NM) to allow exemption of property tax for houses measuring up to 500 square feet and providing 60 per cent exemption for those measuring in between 500-700 square feet. This was also a promise made by the Sena in their manifesto. This NM has been already sent to the state government. Now the commissioner has to send an official proposal to exempt this tax which is yet to be sent. Analysing the financial aspect of this entire move, it seems that the administrative wing is reluctant to do the same.

“If the Commissioner's proposal is contradictory to the NM, the commissioner has a veto power. This proposal will be analysed by five departments of the state.”, added the official.

According the budget statement of the commissioner of 2017-28, 'Although the Assessment and Collection Department underwent a major change due to the abolition of Octroi and consequent shift of the staff. Despite these constraints, the department completed the Integrated Property Valuation System (IPVS), which envisages mapping all the properties by a LIDAR survey, matching it with existing database and detect the deviations.

More than 10,000 deviations have been detected so far and this shall give a boost to the the collections in the coming year (a budget provision of Rs 15 crores was made for the same).

Leader of Opposition Ravi Raja from Congress said, “We are fine with exempting property tax for homes up to 500 square feet but 700 square feet is too much I feel. Despite this if the civic body forwards its proposal to the state then the State must take over on itself to reimburse the loss that this decision will cost the civic body. The financial aspect of this must be examined thoroughly.

The BJP on one hand talks about giving up subsidies and asks people to voluntarily give up on LPG subsidy which is about Rs 100-200, but is now working to exempt property tax worth thousand of crores.”

While the Shiv Sena keeps insisting on that it is their original idea of exempt property tax for Mumbaikars. Yashwant Jadhav leader of the house and Sena leader said, “When we proposed exempting the property tax for homes up to 500 square feet and now the BJP wants to hog up on our original idea by increasing the limit to 700 sq ft. When we proposed the plan of 500 sq ft, we had calculate the cost and found no loss to the civic body but now if the limit is increased then the BJP in the state must calculate the cost and reimburse the same. We will obviously support if the exemption limit is increased from 500 to 700 because it was originally our idea.”

Manoj Kotak group leader of the BJP said at yesterday's Standing Committee meeting that, “The civic body must send a proposal to the state and change the earlier exemption limit of 500 square feet to 700 square feet. Ashish Shelar too has supported this proposal and demanded the same to be increased to 700 on the floor of the house.”  at the meeting councilors also insisted that the administration send the proposal as soon as possible.

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