IE: P-tax reform due by March-end, govt readies to seek extension: March 24, 2008

WITH just a week to go before the deadline for carrying out reforms in property tax collection, the state government will make one final attempt to garner support from across parties – and from its own South Mumbai elected representatives – for the move.Minister of State for Urban Development and chairperson of a joint select committee discussing the issue Rajesh Tope said that despite trying his best to convince the members, there is no unanimity on the matter. “We will organise one more meeting with the members by next week. This will probably be the last meeting to decide on the future course of action,” Tope said.

“I have already spoken to the chief minister regarding this. He too is upset at the delay in the process.

We will work out a strategy soon,” he said.

As one of the reforms mandated under the Centre’s Jawaharlal Nehru National Urban Renewal Mission, the state government is committed to passing a Bill amending the basis of property tax calculation. The Bill will allow the Brihanmumbai Municipal Corporation to switch from the rateable value-based system (based on the notional rentearning capacity of a unit) to the capital value-based system. With rents frozen in areas like South Mumbai due to rent control, it is widely believed that the shift to the capital value-based method (based on rates in the Ready Reckoner) will cause tax liabilities in South Mumbai to rise steeply.

The Brihanmumbai Municipal Corporation and the state government have made a commitment to the Centre to kickstart the reforms by March 2008.

The state government is now planning to seek an extension of deadline from the Centre. State Urban Development Department Secretary T C Benjamin said that a letter regarding this would be despatched soon. “The Central government is happy with Maharashtra’s performance on JNNURM projects so there should be no problem in getting a deadline extension.” He added that apart from Mumbai, the seven other Mission cities in Maharashtra have already carried out property tax reforms.

The Brihanmumbai Municipal Corporation currently earns about Rs 1,700 crore annually from property tax collections. This sum is expected to rise to Rs 2,300 crore if tax calculation is based on the capital value of properties.

The alternative is to withdraw the Bill from the joint select committee and table it on the floor of the House, according to a senior bureaucrat. “The Bill would be approved with majority,” he said.

However, Bharatiya Janata Party MLA Raj Purohit from Mumbadevi, a staunch opponent of the Bill, reiterated that he and other members of the committee who have been opposing the Bill in its current form will not allow it to be approved. “Even for withdrawing the Bill from the joint select committee, it has to be brought to the House. There is no question of supporting the Bill, as the common man will suffer. If the state government has given a commitment, let them pay the price. We were not consulted before doing so,” he said.

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