Cash-strapped Karachi Metropolitan Corporation (KMC) is planning to collect Rs1 billion in 2012 through municipal service charges. Tax payers are also being offered an incentive in the form of priority treatment for this.
These charges will be in addition to taxes of Rs16.8 billion which are levied under different heads by the KMC. These include outdoor advertisements, entry fees in public parks, licence fee from butchers, entertainment duty on musical events and even the weighing machine used by people coming to the zoo.
“If people want us to clean the roads and provide them other civic facilities, then they must pay the tax,” said municipal commissioner, Matanat Ali Khan. “We also need money to pay salaries on time.” After years of delay, municipal service charge was imposed last month on houses measuring more than 40 square yards and on commercial property. But KMC has a long way to go before meeting its target, said its officials.
So far only Rs8 million have been raised, said Khan. “The bills will be sent every quarter. While we make no discriminations, it is only fair to prioritise the complaints of the tax-paying residents.”
At least two attempts have been made in the past to levy the municipal service charges. “When it was first imposed in 2006-07, people were apprehensive and it was cancelled,” said Khan. The authorities started to send bills again in 2010 but stopped a year later as most people did not respond.
Municipal charges on houses vary, for instance 80 to 120 square yard houses would pay Rs150 per month while owner of a 500 square yard house would pay Rs400 per month. Shops, including those in shopping malls, are charged at fixed rate of Re1 per square feet.
Defending the municipal tax, Khan said that the people criticising the decision do not realise the magnitude of the services rendered by KMC. “We run hospitals like Abbasi Shaheed where people pay only Rs5 for checkups and even schools where children are provided free education.”
The payment of electricity bills for street lights, expenses of the firefighting department, salaries of sanitation workers and maintenance of pedestrian bridges and parks, are some of the services which would be covered under the tax, he said. Up till now, only 1.25 million consumers have been identified for levy of the new municipal charge.
Officials said that the municipal charges are still too low to even cover the cost of garbage collection. “We spend Rs3 billion a year on picking up trash from this city.”
KMC is struggling on multiple fronts to raise sufficient revenue for the salaries of 36,000 employees and for maintaining the infrastructure of a large city like Karachi. This is despite the fact that KMC already charges people dozens of taxes along with receiving grants from the federal and provincial governments. The city administration’s budget for the financial year 2011-2012 is Rs44.56 billion. Out of this, around Rs27.7 billion comes from the federal and Sindh government.
It was reported that the revenue from outdoor advertisements tax, the second major source of income for KMC after property tax, has been short of target as well. Only Rs200 million was collected from July to December 2011, which is a mere 17 per cent of the full fiscal 2011-12 target of Rs1.2 billion. Khan said that the rent of shops at KMC-owned markets is also being raised to increase the revenue. KMC has over 9,000 shops in 69 markets which are spread across the city. The shops’ rent, including small stalls where meat and cigarettes are sold, ranges between Rs250 and Rs4,000-which is below the commercial rentals earned by private owners. The money from the shops amounts to approximately Rs70 million every year but efforts are being made to raise the total to Rs140 million.
The shops owned by KMC were originally built for providing jobs to the unemployed but over the years, they have also become lucrative in terms of business.
Published in The Express Tribune, March 14th, 2012.