OTHERS

City corporation embarks on tax collection drive

MCC burdened with mounting expenses and repayment of ADB loan

Special Correspondent

MANGALORE: The Mangalore City Corporation (MCC) has made its intentions clear to crack down on tax defaulters.

The corporation, has decided to continue with the annuated tax collection as it is now burdened with mounting expenses and operational costs.

Also, the repayment of the Rs.309 crores borrowed from the Asian Development Bank (ADB) will start from December 2005. The corporation is left with no other option but improve its tax collection and increase the existing tax rates to pay up its dues.

The water charges and property tax are the main sources of its internal revenue and have been contributing around 40 to 50 per cent to the total revenue receipts. Any effort to bridge the impending revenue deficit will require significant improvements under these two components, though there is scope in other avenues as well, particularly shop rents, trade licences, building licences and others.

If the potential is realized, it can lead to a more diversified revenue base and can reduce the contribution of property tax and water charges to the overall income base. This option, which has been deliberated upon by many bodies, has been more or less accepted as the `only' way out for the corporation.

According to the statistics from the revenue receipts of the MCC, the amount from 98,462 residential properties, and 23,011 commercial properties is Rs. 6.75 crores, with the average collection remaining at Rs. 700 per property per annum.

Solutions

According to the Management Action Plans for the Karnataka Urban Development and Coastal Environment Management Programme (KUDCEMP), for optimum revenue, the MCC has to drastically improve tax collection and increase the rates by 40 per cent. A 35 per cent levy of new charges has also been suggested.

The potential for improvement has been seen in all sources including Property taxes, water charges, trade licences, building licence fee, advertisement tax, shop market rents, betterment charges, Underground Drainage charges and Solid Waste Management charges.

The MCC standing committee on finance and tax appeals had made a report on the effect of the increase of tax slabs in the year 2003 and the following year, the impact of self-assessment scheme (SAS) was added as a special component. However, in case the MCC plans to go in for the SAS, an improvement was expected in the average assessment values of the properties.

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