Budget 2011-12: Tax shock to residents

CDA proposes 90% hike in property tax; budget fails to address water, sanitation and environmental issues.


Azam Khan July 01, 2011

ISLAMABAD:


The cash-strapped Capital Development Authority (CDA) on Thursday presented Rs23.99 billion budget for the year 2011-12, based, according to experts, on ‘desire’ and not ‘reality’ giving a shock of property and water taxes’ hike to the citizens.


The budget document doesn’t offer any solution to the mounting problems of the capital city like shortage of housing units, shortage of drinking water, increasing pollution, lack of proper sanitation, waste disposal and the stalled development of residential sectors.

Major chunk of the total outlay, Rs5.4 billion, has been allocated for non-development expenditure, including salaries, allowances, pensions, repair and maintenance of housing units, showing an increase of 3.7 per cent over last years Rs4 billion.

Around 70 per cent of total budget would be spent on development projects and rest on non-development expenditures that include payment of salaries, pensions and other allowances. Among the development projects that the CDA is expected to execute in the upcoming fiscal year, development of Park Enclave, widening of Kashmir Highway, construction of interchange and flyovers on Islamabad Expressway and above all the development of residential sectors by land-sharing formula are the main ones.

The civic agency expects to get a revenue of Rs3 billion from municipal bonds, Rs13.2 billion from self-financing projects, including sale of plots at the proposed Park Enclave, Diplomatic Enclave, Rs1.60 billion as a grant and Rs2.08 billion from the federal government under the Public Sector Development Programme (PSDP), Rs4.06 billion from property tax, water charges, toll and other municipal charges.

The good news, however, for the inhabitants of the “much-neglected” G and I sectors is that the civic agency has set aside Rs3 billion for the upgradation of these localities, including uplifting of mini markets. Meanwhile, hundreds of industries that are functional in the I-sector, polluting the city environment for quite some time now, are expected to continue working there. The civic agency had earlier planned to move the industrial units out of the city, which could not be executed due to lack of funds and political will. No development on this proposal is expected in the near future. Moreover, the solid waste plant for the capital city is still under negotiation.

While announcing the budget, CDA Chairman Imtiaz Inayat Elahi said the financial plan focused on the projects of public welfare, environmental upgradation, development of roads and residential sectors. In line with the chairman’s words, CDA is going to develop a residential sector for the filthy rich, namely Park Enclave, after 20 years. The sector is being termed by some officials as the “Islamabad’s jewel, for high and the mighty”.

The city managers are also planning to spend huge amount on development of Zone-IV, which stretches over 70,000 acres, linking it with Simly Dam Road to up the real estate value. Before construction was allowed in the Zone-IV area of Margalla National Hills Park, some influential people purchased large chunks of land from CDA at nominal rates and that land was later sold to others at much higher price, the case is currently with the Supreme Court.

Responding to a question, Elahi said that since 2000, property and water charges had not been revised and CDA was eyeing this as an area through which it could increase its revenue. But this increase would only be applicable after the cabinet’s approval.

The civic authority has proposed a 90 per cent increase in the property and water charges. Around Rs200 million have been allocated for Prime Minister’s Rapid Bus Transit project to reduce the traffic woes of the residents of the twin cities; Rs50 million have been allocated for rainwater harvesting and promotion of tourism. To accommodate the tourists, CDA in collaboration with the local traders would ensure to reduce the travelling expenses by announcing subsidies on tickets and food.

The authority’s former member of finance, Saeedur Rehman, told The Express Tribune that the size of the budget is much bigger but based on “desires”. However, CDA spokesperson Ramzan Sajid dispelled this notion saying CDA is expecting to earn more than half of its projected revenue through sale of plots, especially in Diplomatic Enclave, E-11 and Park Enclave in the wake of improvement in the real estate business.

Furthermore, the CDA chairman said that the civic agency has planned to launch municipal bonds to generate over Rs3 billion for the civic body. For this purpose an agreement has already been signed with three private banks - Habib Bank (HBL), United Bank (UBL) and Standard Chartered Bank (SCB).

The authority expects revenue of Rs4.1 billion from property tax and municipal charges, proposing 90 per cent hike in property tax for posh areas. The revenue from this head last year was Rs915 million.

Justifying the move CDA spokesperson Ramazan Sajid said “the increase in charges of water and property were only for corrective measures to streamline the tax network”.

As per budgetary estimates, around Rs800 million have been allocated for the projects that aim at environment protection of the city. These also include plantation of half a million saplings. The environment package also comprises beautification of road sides and medians and that rainwater harvesting is made mandatory at domestic level.

More execution, less planning

The Finance Wing will get Rs200 million for the upcoming year due to the IT related projects which have been added to its domain, whereas the amount allocated for administrative expenses has witnessed a drastic fall in the new budget in lieu of what the authority claims to be “measures to control its internal expenses”. Moreover, lesser amount has been allocated for the Planning and Design Wing as the most of the projects to be worked upon in the upcoming year, are ones which were planned previously. Engineering Wing gets the largest chunk with 52 per cent of the total budgets, whereas the amount allocated for environment-related projects has also been increased.

Ambitious plans to boost revenue

The Finance Wing will get Rs200 million for the upcoming year due to the IT related projects which have been added to its domain, whereas the amount allocated for administrative expenses has witnessed a drastic fall in the new budget in lieu of what the authority claims to be “measures to control its internal expenses”. Moreover, lesser amount has been allocated for the Planning and Design Wing as the most of the projects to be worked upon in the upcoming year, are ones which were planned previously. Engineering Wing gets the largest chunk with 52 per cent of the total budgets, whereas the amount allocated for environment-related projects has also been increased. The other two sources are primarily dependent upon the government where development and maintenance funds by the state will feed the authority’s revenue.

Much to spend on

The expenditure has been divided between different wings of the authority with the Engineering Wing getting the largest share at Rs6260 million for the upcoming year. The authority plans to complete development of various residential sectors and work on different highways of the city, which will take up most of the share of the amount allocated for expenditure. Moreover, due to the austerity measures being introduced by CDA, lesser amount has been set aside for the administration. Reserves are also expected to rise this year. Moreover, Rapid Bus Transit, up-gradation of markets and extension of Kurri Road are some of the other main projects.



Published in The Express Tribune, July 1st, 2011.

E-Publications

Most Read

COMMENTS

Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ