The civic body is set to hike property tax rates by anywhere between 15 and 30%, which will come into effect this financial year. This comes close on the heels of a hike in the power tariff and a proposal to hike water tariff as well.
S.P. Hemalatha, chairperson, Standing Committee on Taxation and Finance, told The Hindu that they are in favour of this move as it has been three years since property tax was last hiked in 2016. The Karnataka Municipal Corporations Act, 1976 prescribes a revision every three years.
“The civic body is facing a fund crunch and is looking at a deficit of over ₹1,200 crore. Property tax is the chief source of revenue for the civic body. Hence, we have opted to hike tax slabs as per the KMC Act timetable,” she said.
The BBMP administration has recommended a hike of 25% for residential properties and 30% for commercial properties, said Commissioner N. Manjunath Prasad. “This is in accordance with the provisions of KMC Act, 1976 that provides for a hike in the range of 15 – 30% every three years,” he said.
However, Ms. Hemalatha said they are considering a hike in the range of 15% to 20%. A final decision will be taken when the matter comes up for debate in the BBMP council.
Though the proposal to increase taxes was made before the Lok Sabha elections concluded, at the time the coalition partners had denied they were considering it. The U-turn shortly after the polls has drawn much ire from the opposition BJP and citizens’ groups.
“The coalition seems to be burdening the common man with hikes in property tax, power and water tariffs all at once. The BJP will stand with the people and oppose this hike,” said Padmanabha Reddy, leader of opposition in BBMP council.
Citizen Action Forum (CAF) has opposed the hike. “Our argument against any hike has been consistent. The BBMP, instead of hiking taxes to mop up revenues, needs to first bring all properties under the tax net. Even today, owners of several lakhs of properties identified by GIS mapping are not paying taxes. Increasing tax rates to generate more revenue without bringing all properties in the tax net is punishing honest tax payers,” said N.S. Mukunda of CAF.
The national Economic Survey of 2016-17 estimates that Bengaluru was collecting only about 20% of the potential property tax.
Though property tax collection for 2018-19 crossed the ₹2,500 crore mark, the highest in the city's history, it still fell short of the target of ₹3,100 crore.
While GIS mapping has identified over 19 lakh properties, the number of property owners who paid the tax in 2018-19 is just over 12 lakh, conceded Mr. Prasad. “Of those, 2.65 lakh properties are empty sites. But it is true that we need to bring the remaining under the tax net. We are taking measures towards the same, even as we hike tax rates,” he said.
New rates from this fiscal
The proposed hike in property tax rates, if it goes through, will be implemented for the ongoing 2019-20 fiscal, said senior BBMP officials. “The hiked tax rates will come into effect for the ongoing fiscal itself. Those who have already paid property tax for the year, will have to pay the arrears,” said BBMP Commissioner N. Manjunath Prasad.
