The Hindu : SAS for property tax causes concern among public

Online edition of India's National Newspaper
Saturday, Apr 13, 2002

Southern States

Southern States - Karnataka

SAS for property tax causes concern among public

By Our Staff Correspondent

Mysore April 12. The proposed self-assessment scheme for property tax collection has caused concern among the public in Mysore owing to several defects in the system under which tax for residential property has gone up, while it has been reduced for commercial property. Experts say this needs to be rectified.

The method of assessing property tax has been changed for the second time in three years here to make it simpler and more transparent. The self-assessment scheme has been proposed as a measure to reflect the prevailing market rate of real estate, a percentage of which is to be collected as property tax.

But the non-governmental organisations here point out that though the scheme has advantages such as transparency and objectivity, the element of fairness in it is debatable. According to A.M. Subba Rao, Convenor of the Mysore Grahakara Parishat, under the new system, the total value of a property is taken to be the sum of the site value and the value of the building on it. The site value is determined by property tax guideline values. But the moot question is why should property tax be related to the property value.

He said experts were trying to solve the problem, and pointed out that civic authorities collected property tax to finance the services extended to the citizens, including maintenance of roads and drainages, streetlights, and garbage clearance. In this system, the rationale of "users pay for services'' has been adopted.

But some might object to the equal treatment of the rich and the poor under it. The scheme was based on the concept that "users pay according to their capacity''. But this was imperfect since the system confused property value with the capacity to pay, Mr. Rao said.

It was pointed out that under the scheme the "proportionality factor'' had not been fixed properly as a result of which tax on many residential properties had gone up. The city corporation had stated that the tax would decrease for 70 per cent of the residential properties and the increase would be marginal for the rest. But there were no instances in which the tax had gone down. But tax for commercial property had reduced drastically. The increase in tax had been linked to the repayment of loan taken from the Asian Development Bank for infrastructure projects. In view of the growing opposition to the scheme, the parishat had proposed a new system with due importance attached to the element of fairness. According to it, a small head tax should be levied on all residents, even those who did not own property, for the services provided by the corporation. There should be no tax on properties, which were occupied by their owners themselves.

A moderate tax should be levied for unoccupied properties, while higher taxes should be imposed on those rented out for residential purpose. This should be based on the total property value. A higher tax rate had been mooted for commercial properties.

Sources in the corporation said it had received many complaints from the public about the increase in property tax under the scheme, which was supposed to have come into effect from April 1. It was likely that the scheme would be modified.

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