The civic body is all set to make a slew of fresh property tax hike, while it fails to extract several hundred crores owed by big commercial establishments and residential owners.
The GHMC’s ongoing deliberations on a possible hike in the property tax to net Rs.1,000 crore revenue has given rise to a new debate on whether a fresh dose of tax is avoidable by plugging the loopholes.
Those who oppose the hike point out that if holes are mended, the corporation could very well collect Rs.1,500 crore without thrusting additional burden on the paying public.
With the 13 lakh properties of different kinds in the City, around 10 lakh are residential and the remainder comes under the commercial category. During the last year, the GHMC was able to generate Rs.500 crore and by March-end this year, the revenue yielded totalled Rs.641 crore against the budgeted Rs.653 crore. Instead of tweaking the current mechanism, the GHMC aims at achieving the target by hiking the property tax.
The hike would affect honest tax payers, while it will reward those resorting to short-cuts like under-valuing their properties and obtaining court stay orders. According to officials, there are more than 30 per cent defaulters in the GHMC limits. Some of the big hotels, business establishments and corporate hospitals, most of which are located in Banjara Hills, have run up defaults of huge amounts. Tax evasion and ‘under-valuation’ are some of the biggest loopholes being exploited by unscrupulous owners. Getting court stay orders is another major stumbling block. Asked if the Corporation could not have filed a common caveat in the court to discourage ex-parte stay orders, officials expressed ignorance of the provisions. Rather, an official offered a queer reasoning: “Everyone has the right to defend if he is not satisfied with the government decision. We cannot compel them.”
The Opposition TDP is ‘opposing’ the move unconditionally. TDP floor leader Singireddy Srinivas Reddy said, “We oppose the hike as it will raise the burden on the common man who is already crushed under inflation. Instead of increasing the property tax, the GHMC should look into the options where several discrepancies can be cleared.”
Officials who are upset with the working style of the GHMC point out that there could be close to 80 per cent ‘under-valuation’ and the hike would only open more doors for more corruption. “It will not help the corporation but the valuation officers and deputy commissions to fill their pockets,” points out an official on the condition of anonymity.
Laxity and illogical decisions
The GHMC failed to show its mettle in cases of cheque bouncing for property tax amounting close to Rs.70 lakh. Another fact that may raise eyebrows is the penalty waiver clause provided by the government at the end of the financial year 2011-12. The waiver had cost the corporation a substantial amount that would otherwise have helped cross the annual targeted revenue of Rs.700 crore.
Residents feel that the long-term government policies, hiking taxes on one hand and providing a waiver on the other, has made a huge dent in their income. “It’s the failure of the government’s policy, adopted at each level at most of the institutions. The common man will continue to suffer due to this mismanagement. If people pay their taxes on time, there would be less scope for officials to reinforce the tax structure,” says Syed Badsha, assistant general secretary, United – Federation of Resident Welfare Associations.
However, officials don’t seem interested in rectifying the loopholes in the system. When asked about the cases of cheques bouncing, additional commissioner (finance) K Ashok Reddy shrugs off the problem, citing this to be the most common aspect in government organisations. “Cheques bounce and every department faces this problem. We keep sending notices,” he says.
About the government’s penalty waiver last year, the official describes it as ‘policy’ adopted by the government. “Last year, it was adopted by the government, this year they may not,” the official added.