The Times of India               19.07.2013

Property tax from slums would yield BMC Rs 990cr

MUMBAI: The civic body stands to lose Rs 990 crore if it fails to collect property tax from slums. A letter has been sent to the Comptroller and Auditor General of India by NGO Watchdog Foundation to investigate the loss to the BMC on account of non-levy of property tax on slumdwellers, despite the civic body signing an agreement in 2006 with the state government and Centre that protected slums will be brought under the tax bracket in 2007-08.

As per the McKinsey report on Makeover of Mumbai, 60% of Mumbai's population lives in slums. "Delhi, Bangalore, Chennai and Kolkata municipal corporations have carried out a geographical information system mapping of all properties to bring slums under the tax net. Why has the BMC failed to do so for Mumbai? We say that GIS and door-to-door survey has not been entirely carried out by the BMC, which would have eliminated the present lacuna and current practices of assessment and recovery of property tax is the need of hour. Hence,

Activists said there are thousands of commercial units in various slum pockets which do not pay property tax. "These units also generate trade refuse, but the BMC does not collect either property tax or trade refusal charges from all these commercial units in various slum pockets in Mumbai," said advocate Godfrey Pimenta, founder, Watchdog Foundation, which is creating awareness among residents on property taxes.

"JNNURM tax reforms should be implemented in totality, which is not done by the BMC," he added. said advocate Godfrey Pimenta, founder, Watchdog Foundation, which is creating awareness among residents on property taxes.

According to the McKinsey report, Mumbai had 8 lakh slumdwellers in 2003 and it showed a substantial increase to 11 lakh slumdwellers in a decade. "It is commercially unviable to rehabilitate almost 60% of the existing slum land because of current market prices and incentive ratios provided under the SRA. and the generosity of the current scheme (with its promise of "free housing").

Therefore, the SRA scheme, as it is currently designed, is likely to be unsuccessful. We propose that the government reform the SRA in such a way that slumdwellers get free land, but contribute partially towards the cost of construction. According to the McKinsey report, they will have to pay either a lumpsum or Rs 250 per month towards their constructed homes as a "user charge", like it is done in other cities," said Pimenta.

So, if one were to calculate 11 lakh slum tenements at the rate of Rs 250 per month property tax, it equals to Rs 330 crore per annum. With retrospective effect from April 2010-2012, it will amount to Rs 990 crore. Pimenta added that just because slums add votes for certain politicians, those staying in slums enjoy the best of civic amenities, including 24-hour water supply without paying a single penny; and water theft is also rampant in certain localities. "Why should the freebies be continued without charging the beneficiaries? Let the state government subsidize their property tax burden, as is done in case of food-grain, kerosene and LPG cylinders," said Pimenta. "Why exempt them of taxes completely?" he asked.

"Assessing slums is a policy matter. We are unable to identify them completely and the second phase will include properties which do not have entered data. We may include slums in the tax bracket only then. Mumbai University is asked to conduct a survey on the existing slums,"said a civic official.

In the meantime, the BMC has started issuing property tax bills of 2013-14 to 2.77 lakh properties and taxes have increased only for 19% of properties.