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New Chennai Mayor's task at hand: Finding funds for big-ticket plans
According to Corporation budget documents, the civic body incurred an expenditure of around Rs 1,500 crore in salary and pension in 2020-21, which has gone up to Rs 1,750 crore in the current fiscal.
As soon as she takes charge, the new Chennai Mayor will have an unenviable task at hand: generating revenue to implement the ambitious plans charted by the Greater Chennai Corporation, which could involve taking some tough calls on increasing property tax rates – a touchy subject for administrators for long. The city’s income from property tax is only a fraction of what other big municipal bodies in the country has been netting, so low that the civic body cannot even meet the salary and pension demand with that.
According to Corporation budget documents, the civic body incurred an expenditure of around Rs 1,500 crore in salary and pension in 2020-21, which has gone up to Rs 1,750 crore in the current fiscal. Compared to this, the collection during the first half of the financial year (April to September) is merely Rs 375 crore. To put this in perspective, the civic body has allocated around Rs 170 crore in 2021-22 to pay interest on loans.
“After the State government revised the property tax, we collected Rs 1,000 crore in 2018-19 and Rs 950 crore the next year. However, it fell after that due to the government’s decision to withhold the revision,” said a revenue official of the Corporation. The collection went down further, as the civic body had to adjust the excess amount collected in 2018-19.
Due to the massive shortfall, most of the projects are being implemented in the city using grants from State and central governments apart from loan assistance from international funding agencies.
As the situation worsened due to the pandemic, civic body officials said the onus would be on the new Mayor, who will have to wade through difficult financial conditions to fulfill the expectations of voters.
“The tax was increased after around 24 years, but it was withheld. But city corporations like Bengaluru, Kolkata, Mumbai and Hyderabad are collecting thousands of crores as property tax,” the official added.
For instance, Kolkata Municipal Corporation has a property tax demand of Rs 2,200 crore, while Greater Hyderabad Municipal Corporation collected Rs 1,140 crore till January. Bengaluru Mahanagara Palike (BBMP) had collected Rs 2,815 crore in 2020-21 and Brihanmumbai Municipal Corporation (Greater Mumbai Municipal Corporation) collected Rs 3,851 crore till January.
A retired official opined that the tax hike was necessary, as the civic body needs funds. “However, the new administration will face opposition if they decide to hike tax rates,” he said.
The residents, on the other hand, want the new Mayor to first collect the arrears, as the several huge buildings have dues running into several crores. “The first thing to generate revenue is to collect arrears. Increasing tax is secondary. Targets should be fixed to tax collectors to collect arrears,” said VS Jayaraman of T Nagar Residents’ Welfare Association.
The association had fought with the civic body, pointing out several anomalies in tax revision that was later put on hold.