In order to shore up civic finances at a time when Pune Municipal Corporation’s income sources are dwindling, municipal commissioner Kunal Kumar has proposed a 15% increase in property tax in the Rs 5,397 cr draft budget for 2018-19 that he presented on Monday.
This proposal will need to be approved by the standing committee and the general body, before it can be put into effect. Citizens will also have to pay 15% additional water tax from the next fiscal which has already been ratified by the general body.
Property tax collection is based on the annual rateable value (ARV) which, once fixed, does not change. New constructions coming up in the fringes attract more property tax but lack basic amenities like water and street lights. Old constructions in the city with a lesser ARV pay less property tax but get adequate water supply and most civic amenities.
The draft budget for 2018-19 was Rs 200 cr less than last year’s Rs 5,600 cr budget, the highest ever. The civic administration had proposed a 12% hike in property tax last year too which was rejected. Civic officials cited shrinking sources of income and increasing expenses for a trimmed budget this fiscal. Kumar called the draft budget a “realistic one”, based on the estimated performance of income sources.
“An estimated slump in income from development charges due to a slowdown in the realty sector, a drop in government aid and no fresh loan application have reflected in the reduction in the draft budget for 2018-19,” they said.
The civic administration expects to collect Rs 135 cr in the next fiscal with this revised property tax structure. Water tax will bring in Rs 20 cr. The proposed property tax hike of 15% includes a 4% hike in general tax, 4.5% in cleaning tax, 0.5% in fire service charges, 1.25% in water benefit tax, 2.25% in education tax and 2.5% in water treatment benefit tax.
Activists are not at all happy about the proposal to increase property tax. They feel that such hikes would not help the civic coffers in the long run as many big property owners and business establishments delay tax payments. What is required is to think of ways to recover outstanding dues and curtail spending on needless programmes and events.
“There are two more months for the fiscal to end. Normally, tax collection picks up in the last quarter. Efforts are underway to push up the kitty,” a civic official said. The civic body hopes to gather at least 80% of overdue tax by March 31, 2018.
Of the 8.34 lakh properties in the city, the PMC has completed the GIS mapping of about 50% properties and this would help in the tax collection from evaders, the officer said.