Property Tax Based on Revaluation of Property is Wrong?:EAS Sarma

(EAS Sarma)

I understand that Greater Vizag Municipal Corporation (GVMC) has notified its proposals for revising property tax rates on the basis of revaluation of property. I have the following objections.

*This is a highly inopportune time for GVMC to notify the proposal, as the residents of Vizag are struggling to deal with the Covid pandemic, subject to lockdown restrictions, and their incomes adversely impacted by the virus in many ways. While the government hospitals are unable to cope with a large number of patients, the private hospitals are fleecing the citizens, with no semblance of any regulation. One cannot be certain about the onset of the third wave of the virus.

*In many localities, where tenants are in occupation of flats etc., the demand for housing has come down and the rentals for new tenants have somewhat declined. To penalize the property owners on the basis of a dynamic valuation method is unacceptable.

With the moves being made by the State govt to bring some parts of the State capital to Vizag, the notional land values would have artificially increased without any tangible increase in returns to the property owners. The relationship between land valuation and the returns on it have become tenuous and levying taxes on that basis would therefore be highly objectionable.

*There are numerous illegal structures in Vizag on which GVMC could levy deterrent penalties to boost up its revenue. For example, there are huge structures that have come up in blatant violation of the CRZ requirements and the building rules. GVMC’s first effort should be to levy heavy penalties on the owners and demolish the structures. It appears that GVMC is adopting a people-unfriendly approach by taxing ordinary citizens and allowing the influential statutory violators to go Scott-free. This is unacceptable. Why should the citizens pay for the high level of corruption that prevails in GVMC and the collusion of its officers with the real estate developers and the rule-breakers? Had the Town Planning wing of GVMC been alert and rule-bound, it could have recovered substantial penalties from such habitual, statutory violators.

*GVMC had earlier granted huge tax exemptions to private companies such as the Hinduja power company. GVMC has also excluded companies such as Gangavaram Port from taxation. This is despite the fact that the supporting infrastructure is provided and maintained by GVMC. It appears that ordinary citizens are being forced to pay for the facilities used by these private companies. This runs counter to the basic requirement of equity in taxation and its rationale.

*For the sake of public accountability, GVMC should, in the first instance, present to the citizens a comparison of the property tax rates in different cities, the extent of arrears of past dues in Vizag, the reasons for their non-recovery, the reasons for proposing enhancement of tax rates, the manner in which the taxes collected are put to use, the proportion of the tax revenue used for paying the salaries of GVMC’s employees, etc. so that there can be a public debate on the subject before GVMC can elicit objections. The way GVMC is proceeding at present lacks transparency and a spirit of public accountability. The citizens have a right to know how each rupee collected as taxes is utilized and whether there are avoidable items of expenditure, the saving of which can minimize the taxation rates.

*There are many avenues open to GVMC to raise its revenue. For example, many corporate educational institutions that earn enormous profits at the cost of the citizens use public spaces (e.g. Daspalla hill, old jail surroundings) for parking their buses. A luxury hotel like Novotel, instead of providing parking space to its visitors, forces the vehicles to park outside, causing congestion. Similarly, expensive private hospitals like MediCover, CARE, Apollo, Seven Hills, etc. force the majority of the attendants of the patients to park their vehicles on adjacent roads, as they do not wish to invest in parking spaces of their own. On the other hand, the charges they levy on the patients are astronomically high. GVMC could identify all such cases and duly tax them in view of the value of the public spaces involved.

*GVMC’s priorities in spending its revenues raise serious public concerns. For example,  why should GVMC undertake huge expenditure on beach beautification works, when it is unable to provide enough cremation/ burial facilities for the disposal of the mortal remains of the dead? When the Covid second wave peaked a few weeks ago, the kith and the kin of the dead were forced to wait in long queues for want of adequate cremation facilities and undergo mental trauma. GVMC had earlier proposed to construct an underground parking facility near the beach at a mind-boggling cost when it is unable to provide the basic amenities such as potable water, sanitation, etc. to the residents of the hundreds of slum dwellers without whose services the city cannot survive. There are several such items of avoidable expenditure, the saving of which should add to GVMC’s finances significantly.

I, therefore, demand that GVMC drops its proposal forthwith to revise the taxation rates.

(Full text of EAS Sarma’s letter to Smt G Srijana, Commissioner, GVMC, Vizag)

(E A S Sarma, Former Secretary, GOI. Visakhapatnam)

 

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