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Low property tax tops PM's agenda for Niti meeting

1 week ago 6

NEW DELHI: A packet of trash bags costs around Rs 50 on an e-commerce site, almost twice the per capita property tax in a city like

Kota

(Rs 28) and one-third the level in Amritsar (Rs 150) in 2017-18. Mumbai, which is at the top, had a per capita mop up of a little over Rs 4,000, but the average for India is just Rs 688 - the cost of a 5kg bag of basmati rice.
Given the level of resources that municipal bodies generate, it is no surprise that they find themselves with little funds to meet their developmental needs, an issue that is going to be deliberated in detail at the

Niti Aayog

governing council meeting on Sunday. The agenda for the meeting, to be chaired by Prime Minister Narendra Modi, has pointed to the dismal revenue of civic bodies and suggested an overhaul, by linking property tax to electricity or water bills. In fact, the agenda flows from a recent meeting the PM had with state chief secretaries.
Besides, it will also suggest that municipal bodies be tasked with collecting professional tax instead of states. The issue of professional taxes on the non-salaried is an issue that is close to several states, given that they now have limited sources to raise revenues.
Collection of property tax is one of the major sources of municipalities' own revenue and the municipal bodies often hesitate to increase property tax due to political considerations. There have been several instances when civic bodies have announced waiver of house tax before municipal polls. Currently, property tax accounts for less than half the revenue generated by the municipalities. According to the agenda, the own revenue generated by municipal entities is barely 0.15% of the GDP, compared to 0.6% in developing countries and 2.1% in developed nations.
What makes the equation more lopsided is that half the spending is on administrative and establishment expenses, leaving little to spend on development activities.
The Centre will also suggest thatstates bring all properties falling under every municipality under the property tax net by using IT tools, space and

GIS

technology to improve the tax collection.

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