Sindh agrees devolving property tax to DMCs

By PPI News Agency Mar15,2018

KARACHI: Sindh government in collaboration with World Bank has decided to devolve property tax collection to the local bodies, DMCs, for which a proper database and capacity building of concerned local bodies’ staff would be undertaken shortly.

This decision was taken by Sindh Chief Minister Syed Murad Ali Shah in a meeting with a World Bank team led by Senior Economist Ms Yoonhee Kim, Urban Development Specialist Shoaib Athar, Public Sector Specialist Irum Touqeer, Urban Development Specialist Takaaki Masaki and others.

The Sindh government delegation led the chief minister comprised Minister Local Government Jam Khan Shoro, Mayor Karachi Mohammad Waseem, Principal Secretary to CM Sohail Rajput, Secretary Excise Haleem Shaikh, Chairmen of DMCs and others.

The chief minister in his opening remarks said that he had already devolved property tax to local bodies to KMC but they have to develop a system for collection.

He added that property survey of Sukkur has already been conducted. Earlier, there were only 35,000 households registered for collection of property tax but the fresh survey revealed there were 65,000 houses fit for levy of property tax.

The World Bank team through a presentation said that the current collection of property tax in Sindh is Rs2billion while there was a potential of Rs7.2billion.

Citing the examples of Punjab, they said that they collected $88million during 2015-16, Chennai collected $90million, Indian Hyderabad collected $179million, Bangalore $201million and Mumbai $373 million.

“These figures are enough to assess how much Karachi in terms of its size and household can collect huge property tax,” they said.

The World Bank team said that the tax base has been eroded by virtue of very generous exemptions. It was also pointed out that the administration of property tax is based on ‘old’ system and technology, adding the current billing system is not fit for the purpose.

They recommended a self-assessment and self-payment platform for property tax customers. The property tax arrears constitute a major problem and significant loss of revenue, they said.

The World Bank suggested devolution of Urban Immovable Property Tax (UIPT) to local bodies, DMC.

On this this chief minister said that the DMCs of the megacity do not as yet have the capacity to administer UIPT collection functions due to the absence of staff trained in property tax law and procedures, and there is also lack of IT capabilities.

He added that he had already issued directives to the local bodies to develop an efficient system.

The meeting agreed to take measures within next three months include agreement and legislation about UIPT devolution roadmap and institutional arrangement and survey preparations and their launch.

The Bank also suggested phase-I (July 18 to June 2020) in which survey would be completed along with preparation of property tax database. An improvement would be in taxpayers’ services.

Training and capacity building of DMCs staff identification, procurement, pilot deployment of ICT system for DMC would also be undertaken.

In the phase-II (July 2020 to June 2023) legal reforms, introduction of a self-assessment and self-payment system would be carried out.

The valuation methodology and updating valuation table would also be made and exemption and relief system would also be reformed. It was agreed upon that the enforcement powers would be strengthened further.

It was decided to undertake a full survey of all buildings in the six DMCs of the megacity; collect qualitative and quantitative data for each building, including property use, to collect the GPS co-ordinates for each building including digital image and to build upon the experiences from Sukkur and with participation from ETD and DMCs.

It was also decided to establish an IT Revenue Management System (IRMS) for DMCs. There would be hardware and software determine host for the data server. DMC staff to be involved in the building survey and they would be provided training in the new IT Revenue Management System, training in property tax management including valuation, law, billing, collection and enforcement taxpayer/ customer services training.

The chief minister directed excise department to identify and legalize the changes whatever needed to support a modern, ICT-based, Revenue Management System.

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