Hindustan Times 18.11.2009
BMC looks for new taxes to increase revenueThe civic body wants to battle its cash crunch and bolster its resources by introducing new taxes.
The Brihanmumbai Municipal Corporation (BMC) earns its revenue from octroi, property tax, development charges, water and sewerage charges and education cess tax. The BMC believes these taxes have reached a saturation point and cannot be stretched further.
The BMC’s accounts department has sent out letters to all the head of the departments asking them to study possibilities of new taxes.
Chief Accountant Ram Dhas said replies were expected in a fortnight.
“We have asked them to find out from other corporations in the country if they levy any other taxes which the BMC currently doesn’t,” said a senior civic officer, requesting anonymity because he is not authorised to speak to the media.
Acting Municipal Commissioner RA Rajeev said, “Right now there is no plan to increase the taxes. But the accounts department is exploring the possibilities of developing new taxes.”
The main reason for the dip in revenue is the 10 per cent drop in octroi collections due to the economic slowdown. The octroi department is the prime revenue-generating department for the BMC and contributes one fifth of the BMC’s annual budget of Rs 19,000 crore.
The BMC last saw a cash crunch from 1999 to 2001. Despite the crunch, it is still the country’ richest civic body.
Applying the sixth pay commission has also increased the civic body’s revenue expenditure by Rs 1,800 crore.
The BMC is also writing to the Centre to give them subsidies in custom duties and value added tax (VAT) on imported equipment like fire fighting machinery and machines for civic hospitals.
The corporation hopes that the shift in calculation of property tax from rateable value [on rental value of property] to capital value [on market rates] will increase the revenue from property tax by 10 per cent.
