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HindustanTimes Fri,18 Apr 2014

No octroi may mean less income, fewer projects, say experts

Kunal Purohit, Hindustan Times  Mumbai, February 06, 2013
First Published: 01:20 IST(6/2/2013) | Last Updated: 01:22 IST(6/2/2013)

While the civic body has announced its intention to scrap octroi, its tight-lipped approach on its financial implications has sparked off speculations that it could mean higher taxes for Mumbaiites. Octroi is the highest income-generator for the civic body.

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The Brihanmumbai Municipal Corporation's (BMC) budget for 2013-14, presented by Sitaram Kunte on Monday, has not gone into the details of how this transition will be made, and there are indications that the BMC's search for more sources of revenue might start soon.

The BMC has said that it is contemplating imposing a waste collection tax on landowners such as MMRDA, Mhada and Mumbai Port Trust (MbPT). This tax, the budget said, will be for the BMC's waste collection and cleanliness activities in their areas. A revision of water and sewerage charges may also take place.

If sources are to be believed, the BMC is considering a similar charge for other areas in the city. "Our solid waste management is in a mess and we are looking at options to process waste more effectively. Once those options are finalised, we will look at a charge on waste collection that will make these new technologies financially feasible," said an official from the solid waste management department.

Experts are concerned that collections through the local body tax (LBT), which is to replace octroi by October, may not be as high as octroi. "Traditionally, it has been found that wherever octroi has been abolished, that civic body's financial position has weakened. This forces the civic body to start depending on the government, which is a situation fraught with political compulsions," an economist with a university said.

Experts also fear that lesser revenue will affect future projects. This year, for instance, low collections from property tax and FSI premiums meant that the BMC did not have money for proposing new projects for the city.

Dilip Patel, group leader of the BJP, a party considered to be close to the trading class, said: "It will be difficult for the BMC to monitor the collection of LBT. Traders may not go for conscientious self-declaration and the BMC may not be able to arrest this phenomenon, at least initially."

The BMC, however, is confident. "We are confident of a comfortable financial condition with the introduction of LBT. We are looking at matching our estimates or exceeding them," said additional municipal commissioner Rajiv Jalota.

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