Municipal tax shenanigans: Unable to collect, CDA to squeeze existing taxpayers

City managers to increase rates on property, add new levies after failing to collect 55% of dues from city

ISLAMABAD: City managers keep looking for new revenue generation sources instead of streamline and improve their dismal performance in collecting municipal taxes and other dues from existing sources.

A review of the Capital Development Authority’s (CDA) performance in the previous financial year exposes the civic agency’s inability to manage its budget.

Meanwhile, the CDA’s finance wing has opted to go for the easy way out by levying additional taxes instead of going after tax evaders.

Under the CDA Ordinance, The civic agency is an autonomous body and a self-accounting entity. It generates its income from taxes collected under revenue accounts and other sources such as land auctions.



The figures for the financial year 2013-14 show that the CDA collected only Rs2.95 billion in municipal taxes against a target of Rs6.6 billion for the same year – almost 55 per cent less than the target.

The taxes include property taxes, municipal services, environment and horticulture receipts, toll tax, allied receipts, and interest on deposits.

Besides revenue accounts, the CDA also remained fail to achieve targets under the self-financing account – most notably in land sales. For FY2013-14, the CDA generated just Rs13.8 billion against a revenue target of Rs27.2 billion.

CDA Finance Member Arbab Sher Bahadur spoke with The Express Tribune and acknowledged the failings in revenue collection.

“Generally speaking, it mirrors the prevailing tax collection situation in the country, where people seem reluctant to pay to the government for the services facilities it provides,” Bahadur said.

He later spoke of plans to revise tax rates, saying that property taxes were last revised in 2001, while property charges were last revised in 2000. The CDA had plans to revise these charges in FY2013-14 and a proposed revision effect was incorporated in its budget estimates, but the changes never materialized, further widening the gap between estimates and actual collection.

“The situation is not ideal. But it’s much better than previous years,” the CDA board member commented.

Wider net

The authority has been mulling how to collect taxes imposed in FY2013-14 on private housing schemes and high rise buildings in the city. Both sectors are currently excluded from the CDA tax net with regard to property transfer and houses layout approval fees.

“There are about 50 private housing schemes comprising of 60,000 units within the CDA’s municipal limits. The civic agency has decided to levy building control fees on them,” the finance member said, adding that for the FY2014-15, the CDA has estimated it would raise Rs50 million under this head.

Similarly, he said, transfer fees on apartments in high-rise buildings would also be collected from now and the authority has a target of Rs500 million under this head.

Bahadur said a variety of factors, including a staff shortage, had been delaying fee collection.

The CDA approves NOCs and
bylaws for private schemes and high-rise buildings, but when it comes to tax collection, the owners refuse to pay, Bahadur said, adding that societies and high-rise buildings owners were resisting the move, but they would have to pay taxes for the services they are provided.

Bahadur said municipal tax collection estimates for the ongoing financial year have been kept realistic to reduce the between targets and actual collection.

Published in The Express Tribune, January 24^th, 2015.