Have you heard of 1000% property tax hike?

CJ:

Vyasamoorthy

,  1 hour ago  

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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.

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