Even though holding tax is the second highest revenue generator for the Bhubaneswar Municipal Corporation (BMC), the corporation is helpless when it comes to bringing tax defaulters to task in the absence of a strong legislation.

During its inception, BMC followed the Orissa Municipal Act, 1950 and then the Orissa Municipal Corporation Act, 2003 was implemented. The holding tax, a part of the Orissa Municipal Act, 1950, is toothless as it does not give the corporation the actual power to deal with the defaulters who have not paid the holding tax yet or are repeated defaulters.

“In the Act introduced in 2003, the holding tax was upgraded to be known as property tax. But the Corporation Act was not implemented in its complete form in 2003. A few Acts under it are still awaiting State Government’s approval,” said BMC Deputy Commissioner KP Pati. The property tax and the rules under it are also yet to get the Government’s approval.

BMC’s highest revenue of Rs 50 crore is generated through entry tax that the government pays annually. The second highest revenue of about Rs 20 crore is collected through holding tax. Like last year, this year also BMC managed to collect Rs 20 crore. “If the property tax is brought under the Corporation Act introduced in 2003, it will give the corporation additional power. Under the Act, even the owners of vacant land have to pay holding tax,” said tax inspector Nagen Pujapanda.

Another problem that BMC faces is that the Government is one of its highest defaulters along with a few other private parties. For the last few years, BMC had been putting up hoarding displaying the names and details of the highest defaulters but to no effect. This year, BMC stopped the practise as the defaulters did not pay any heed to it. “We will have to devise other ways of collecting the pending holding tax from them,” said Pati. He added that since there was no strong legislation to back the corporation, all they can do is send the defaulters a distress warrant.

BMC resumed the assessment of the tax units in the city in the last fiscal year. They had stopped it for the past few years due to a stay order by the High Court in 2010. They have added 7000 tax units this year in addition to 81,000 holdings that they had assessed before 2010. BMC is targeting to collect Rs 30 crore in next fiscal by increasing the number of holdings through assessment.