The Hindu 26.09.2009
Row over building tax assessment system
N.J. Nair
THIRUVANANTHAPURAM: Opposition to a government decision to shift the base of building tax evaluation from annual rent rate to plinth area-based system could derail attempts to end tax evasion and remove alleged arbitrary assessment as exists currently.
Informed sources in the Local Self-Government Department told The Hindu here that the first State Finance Commission had recommended the switchover to the plinth area-based system. Amendments were made to the Panchayati Raj Act and the Municipalities Act in 1999 to facilitate a smooth changeover to the new assessment system. The government had only drafted the rules and cleared the ground for the switchover to streamline the collection mechanism and plug loopholes to end tax evasion, the sources said.
Tax structure
Though rules mandate building tax revision once in five years, the tax structure has not been modified since 1993. Successive governments have been deferring the revision due to various reasons, including the recurring Lok Sabha, Assembly and civic elections. The general perception is that a thorough change in the assessment system will antagonise the electorate and affect the poll prospects.
The existing system offered sufficient leeway for manipulating the rules. Complaints galore have been raised over the privileged and those having a say in the decision-making process enjoying undue concessions.
For, officials of the local self-government institutions fix an exorbitant rate and then grant concessions without considering the merit of the requests for slashing tax. While many residential and commercial buildings remain outside the tax net, others religiously pay the prescribed tax too.
Revenue loss
Under-assessment and non-assessment of buildings have caused substantial revenue loss to the local bodies and have even cut the main revenue source of certain civic bodies which are facing acute funds crunch to meet even the routine expenses, the sources said.
The proposed system offers scope for self-assessment and will make the entire assessment transparent. This is expected to increase the revenue flow to the civic bodies, raising their financial capacity to take up more developmental works.
Since it has been cleared by the Assembly, the opposition raised by a section of civic chiefs and elected members will not make any significance. Specific guidelines have been laid for assessment and hence only those who evade the tax need be concerned about the new system, the sources said.
