Tuesday, February 24, 2009

Have you heard of 1000 % hike in property tax?

Here is an article that I ahve published in the Citizen Journalist Website: Merinews.

You may leave your comments, in addition to this group here, in the website as well.
URL is given at the end.

Have you heard of 1000 % hike in property tax?

Unheard levels of property tax revision in Secunderabad Cantonment is causing worry among property owners. While agreeing with SCB's contention that development projects justify steep increase, alternate ways of funding such projects are suggested.

,  1 hour ago   Views:34   Comments:0

SECUNDERABAD CANTONMENT Board, deemed equivalent to a municipality, is revising Property Tax (for residential and commercial properties) after a long gap of 20 years. Property Tax Revisions are to be carried out at regular intervals of three years. Why they were inactive all along is a mystery. In the case of residential properties, the tax increase proposed now ranges from 200 per cent to 800 per cent. A few persons I know, have got 1000 per cent revision too.

You can see that whole proposal is biased, unimaginable (unheard of you may say), unjustified, unaffordable and too harsh on the citizens. Even the elected members of the cantonment board - including the Vice President Pratap- are against a hike of this magnitude.

On being asked about the steep raise in taxes, Chief Executive Officer of SCB came forward with a number of arguments in his favour. The first one is that SCB has not revised taxes since 1988. The statement that tax has not been revised for a number of years is not true. I know of several people who have had their property tax revised regularly once in three years, even during this decade. And these persons have not made any additions/alterations to attract revision either. Large scale revision across the entire cantonment may not have happened for a long time.

If they had revised the taxes regularly, the increases would have been gradual (earlier the raise used to be 20 per cent to 30 per cent). This would have been normal revision and no one would grudge paying the same. Now, after 20 years, many property owners have become senior citizens and after retirement are living with meager pensions or interest on savings. With no regular income at their disposal, how does one expect compliance of tax revision of the order of several hundred per cent?

CEO also has been saying that they need Rs 100 crores for taking up developmental works like underground drainage, sewage treatment plants, road widening etc. Unless the taxes are hiked, no development work can take place.

SCB plans to fund the bulk of this amount from property tax collections. This is simply not done. A small proportion of developmental costs may be passed on to property owners but not the entire burden. Most municipalities get funds for developmental projects from government grants like JNNURM, raising bonds, seeking loans etc.

SCB should pursue getting funds from JNNURM. It may also be interesting to note that SCB has been showing surplus funds during the past successive years, current accruals amounting to Rs 80 crore. How about using a part of it?

SCB says that they are following the customs, practices and norms of GHMC. Yes, only wherever it is convenient for them. In GHMC property tax rules, concessions are available for self-occupied properties, houses having eco-friendly measures like rain water harvesting, trees, solar heating or for houses built many years ago (old buildings) etc. There is no such provision in SCB tax structure. GHMC proposed revision of property taxes (50 per cent raise) in 2007, and after a lot of furore, the Chief Minister of Andhra Pradesh simply cancelled the whole move.

GHMC is supposed to be the role model for SCB. GHMC has generated crores of rupees by letting people get away initially with illegal constructions for several years and then come up with a system of heavy fines (penalty) through the so called building regularisation schemes. SCB also plans to follow this way. They can generate lot funds because violations are aplenty. Of course this method is just a one-off measure of getting some money.

There have not been any large scale developmental activities or infrastructure improvement in the cantonment area for several years. For instance, in the area where I live (Gruhalaksmi Colony) many houses could not be let out for the simple reason that there was acute water shortage. Only a few offices came forward to rent out some houses as their water requirements are small.

Another area that should be SCB's immediate concern is collecting tax arrears. Huge amounts are pending from government/defense establishments and of course defaulting individuals and commercial establishments. Fortunately, in the case of honest tax payers, online payment counters that have come up a few months ago have eased the problem of running after tax collectors. Since tax collectors' work has been reduced, they must now work towards collecting long term dues.


Having said all the above, one redeeming feature in the whole tax revision exercise is SCB's attempt to reduce anomalies and to standardise taxes based on the principle of equity. There are 6,756 plots in the SCB area, for which owners are paying only Re 1 to Rs 50 property tax per year to the board. There are another 2,200 properties, for which the tax is less than Rs 100 per annum and another 2,000 properties for which the tax being paid is less than Rs 200 per annum. In order to tackle this menace left unchecked over several decades, SCB has come up with a concept of zones and sub zones, type of construction. This is good and everyone appreciates the move.

After taking into account all the factors and facts mentioned above SCB should come out with a revised proposal that is reasonable, justifiable and affordable. Will citizens just grin and pay it up without protest? I am sure there is enough wisdom in SCB authorities not to kill the goose that lays, if not golden eggs, just eggs that you need for survival.



Dr P Vyasamoorthy,
30 Gruhalakshmi Colony, Secunderabad 500015
Ph 27846631 /  9490804278

I blog at:

No comments:

Post a Comment