CHENNAI: After braving the fire from political rivals and public over the sharp rise in power tariff and local body taxes, the State government is understood to have decided against implementing the annual tax hike ahead of the crucial Assembly election that is just around the corner.
The government has also absorbed the latest electricity tariff hike for subsidised consumer categories and MSMEs, shielding them from higher power bills.
While the power tariff is revised annually by the Tamil Nadu Electricity Regulatory Commission, local body taxes are increased through resolutions adopted by the respective councils.
This year, however, none of the councils, including the Greater Chennai Corporation, has passed a resolution to increase taxes.
“Local bodies can increase taxes only after the council passes a resolution. None of the councils has done that yet. We continue to follow last year’s structure unless the government issues fresh directions,” said a local body official.
Government sources said a decision on revising taxes has not been taken this year. The Assembly election is widely seen as the primary reason for the decision to defer the hike.
In Tamil Nadu, local bodies largely depend on primary tax revenues such as property tax, vacant land tax, professional tax, and water and sewerage connection charges. These levies were earlier revised once every five years through government orders.
Initially linked to the rental value of buildings and later revised to a per-square-foot calculation, the tax structure remained unchanged for nearly a decade until it was revised in 2022. After facing flak, the quantum of hike was reduced after tweaking it to an annual tax hike to ensure that the local bodies – and the State government – do not fall into financial despair.
The added incentive is that local bodies that meet the tax revenue targets set by the Centre become eligible for grants. For example, Dindigul Corporation met the target and received Rs 10 crore in grants and funds for special schemes.
According to the government order, urban local bodies must increase taxes by 6 per cent every year. Last year, all urban bodies passed resolutions to implement the hike from October 1, 2024. This year, however, no council has approved the mandatory increase, and tax structures remain unchanged from last year.