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We want infrastructure but no taxes!
Written By mcadambi - 22 November, 2008
Bangalore Infrastructure BBMP JNNURM property taxes CVS SAS suggestion
We the proud citizens of Namma Bengaluru, arguably having a higher Household Income on an average compared to the rest of India cry a lot for infrastructure.
Yet, we do not want to pay property taxes and to add insult to the injury want to pay abysmally low taxes. If we do not pay adequate property taxes, we cannot even have good infrastructure.
Property tax represents some of the core revenues for BBMP and generating a lot of Property tax is essential.
New Yorkers criticise Mayor Michael Bloomberg about how highly taxed New York City is, but laud him for achieving extremely good civic services. Mayor Bloomberg ofcourse is only able to do that because of high tax revenues that he gets for the city.
We in Bangalore should get used to having high property taxes. It is the only natural and fair way for paying for the infrastructure upgradation that we desperately need.
Lets not look far away to New York City. Lets start with the City of Patna in Bihar.
Arguably, the Patna Model of Taxation is the the most legal and fair practice that even JNNURM seeks to promote:
More about that:
http://124.30.164.71/jnnurm/MOA%20Best%20Practices/Madatory%20Reforms/ULB%20level/Property%20Tax%20-%20L3/Area%20Based%20Assessmet%20of%20property%20tax%20-%20Patna.pdf
Therefore, i urge namma bengaluru to look at the bigger picture. The patna model of taxation is based on area, construction type and use. The actual property tax rates fell and the tax net increased massively.
Therefore, the fiscal health of the Patna Municipal Corporation is indeed very good. I am sure we have similar dreams for Namma Bengaluru.
COMMENTS
Property Taxes Based on Development
Naveen - 26 November, 2008 - 17:27
Mcadambi,
Such cases would be there, but few & obviously exceptions cannot be made for anyone.
IT workers or those with higher incomes will choose to live in areas with better facilities, & those with lower incomes will have to move out to areas that are commensurate with their affordability - unfortunately, this is probably the only way it will work.
Take Defence colony, Indiranagar, Koramangala or Jayanagar - these areas were affordable previously, but now, with high costs & correpondingly high taxes, it can be expensive living in any one of these areas, but taxation must also be higher - this cannot be helped.
On the other hand, if areas with poor roads, poor services, etc. have to shell out heavily since infrastructure has to be upgraded, most would not be able to afford since most would be from lower middle classes with limited incomes - such people would be much higher by numbers.
mcadambi - 25 November, 2008 - 20:11
This is where the fundamental disconnect is.
We cannot have world class infrastructure without world class property taxes.
But there is a way out. Arthur Laffer, a noted economist, famous for his idea, the "Laffer curve", opined that lower tax rates leads to a wider tax net and hence higher revenue collection.
SAS, when it was introduced under SMK's regime won plaudits for it's simplicity. A capital value based system is a core requirement if we are to get funds from JNNURM.
BBMP elections and property tax muddles
mcadambi - 25 November, 2008 - 20:14
Politicians across the political spectrum do not want any taxation structure resembling a capital value based system.
There is some truth to this. The reason for collecting property tax is to develop civic infrastructure and maintain it as well.
The big flaw of the CVS is that it is not "ward wise". It taxes older areas which already have decent infrastructure and diverts most of those taxes to newer areas.
Now, for example, consider this layout:
http://bangalore.citizenmatters.in/articles/view/571-bda-layout-roads
That layout is a newly formed layout, much younger than Sadashivanagar. Property taxes according to CVS are quite low in this layout where property values may be around Rs. 2000 - Rs. 3000 a sq ft in contrast to Sadashivanagar where it is around Rs. 15,000 a sq ft.
The ideal solution then would be to reconfigure CVS according to specific ward needs.
That means, new layouts like Upadhya Layout would be taxed more because they need more infrastructure and places like Sadashivanagar would be taxed less because they need less infrastructure and would actually like to maintain existing infrastructure.
Patna Model - Needed in Bangalore
Naveen - 24 November, 2008 - 04:26
Mcadambi,
Thanks for posting this.
The FKCCI president in Karnataka also bemoans the revised SAS property tax rates as too high. What a shame !
We need some urgent reforms here to improve property tax collection. Bangalore also has the dubious distinction of being the city with lowest property tax collections amongst the six metros. Even cities like Pune & Ahmadabad have higher tax collections.
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