CHANDIGARH: A surprise inclusion, a table agenda proposing hike in property tax created quite a storm in the first general house meeting under new Chandigarh mayor Harpreet Kaur Babla on Friday.
Even as the MC house rejected the proposal unanimously, the issue lingered on with MC commissioner giving his first-ever dissent note in the house, terming the decision of the house unjustified, especially in the wake of ongoing financial crisis in the municipal corporation, which is struggling even to pay salaries to its employees.
The issue was presented in the MC house as mayor Babla allowed the table agenda, proposing increase in property tax in both commercial and residential segments. Members of Congress and AAP held a protest and criticised the mayor’s move to bring the agenda in the house, saying that it would have put an additional financial burden on the public.
In the 3-page table agenda, MC officials proposed a 12% increase in commercial property tax based on the percentage of ratable value from the existing 3% and an annual increase of 1% till it reaches 15%. On residential properties, officials proposed a 5% increase in the same proportion.
Saying that property tax should be around 1% of Chandigarh’s GDP, which is approximately Rs 65,000 crore, the tax collection should ideally be more than Rs 500 crore. But at present, the property tax collection merely stands at Rs 45 crore.
The official proposal even referred to Mohali’s property tax collection, saying that, “With a population of merely 2.4 lakh, Mohali’s annual property tax demand is Rs 40 crore. But despite 12.5 lakh population, Chandigarh’s tax demand is just Rs 45 crore, which is not at all justified.”
The agenda said, “The matter is placed for house members’ approval to revise the existing commercial property tax percentage rate of annual ratable value of 3% to 12% with an annual increase of 1% until reaching the limit of 15% and to increase the residential property tax rates in the same proportion with an increase of 5% annually. As per the mandate given in the 1st chief secretaries’ conference, property tax should be around 1% of the GDP.”
The agenda reads, “Currently, the municipal corporation is facing a financial crunch, therefore it has become necessary to attain self-reliance by augmenting own sources of revenue. A comprehensive analysis with the MC of Mohali reveals that despite a smaller population of 2.3 lakhs, the annual property tax demand stands at Rs 40 crore approximately. In contrast, Chandigarh MC is catering to a population of 12.5 lakh but has an annual property tax demand of Rs 45 crore. This disparity underscores the need to revise property tax rates in alignment with adjoining urban local bodies.”
Times View
The cash-strapped civic body finds itself pushed to the wall to generate resources for its working, but it should refrain from any knee-jerk reaction. While a periodic rise in property tax is inevitable, the MC should first ensure that it is meeting the existing targets. The fundamental point in any tax system is fool-proof tax recovery. If the defaulters continue to play truant, there is no point in taxing the complying tax-payers further.
