WB okays $150m for raising revenue

Funding to help Sindh enhance property tax receipts, improve municipal services

ISLAMABAD:

The World Bank Group's board of executive directors has approved $150 million in financing for the Sindh Property Revenues Enhancement Programme (Sindh PREP). The programme will improve urban property tax collection and strengthen municipal service delivery in Sindh.

"Cities that can raise their own revenues can plan and invest for the long term," said Bolormaa Amgaabazar, World Bank Country Director for Pakistan. "Today, Sindh's local councils depend on provincial transfers for more than 95% of their revenues. By helping Karachi collect property taxes from its residents and businesses and by reinvesting most of that revenue in local services, this programme will give Sindh's cities the means to finance the infrastructure they need."

Sindh PREP will support the provincial government in improving urban immovable property tax (UIPT) collection and strengthening municipal service delivery capacity in selected local councils. Despite being one of the world's largest cities, Karachi currently collects only around $8.5 million annually in property tax while cities of similar size collect 82 to 350 times more.

The programme aims to increase this to $85 million annually, raising compliance from 20% to 50%. It will do so by strengthening UIPT collection, compliance and administration, including through deployment of a UIPT management information system for billing, payment processing and grievance redress, and by rolling out integrated financial management information systems across local councils. About 70% of the collected UIPT revenues will be reinvested directly into municipal infrastructure and services in the participating local councils.

The programme will benefit Karachi's 25 local councils. Its primary beneficiaries are the 3.58 million people living in these councils, where service delivery investments will be financed. Funding will be linked to results: annual performance assessments, conducted by an independent verification agent, will determine the awards each council receives and these awards will finance the rehabilitation of climate-resilient municipal infrastructure and services, including drainage, sewerage, schools, fire stations, roads and street lighting.

The programme also includes an Investment Project Financing component of $40 million that will expand property surveys and UIPT administration to 20 local councils in Sindh's other urban centres, with an indirect benefit to about 4.5 million people.

"Karachi has significant untapped potential to generate revenues from its property base and use those resources to fund the infrastructure its residents and businesses need. This programme will help Sindh strengthen fiscal sustainability enabling cities to plan, invest and deliver services from their own resources effectively," said Davison Muchadenyika, Senior Urban Development Specialist at World Bank.