BMC budget to pinch pockets with hike in taxes, new levies

  • Kunal Purohit, Hindustan Times, Mumbai
  • Updated: Feb 05, 2015 01:05 IST

An increase in existing taxes and the imposition of new ones — that is the big take away for the city from the civic budget for 2015-16, presented by Brihanmumbai Municipal Corporation (BMC) chief Sitaram Kunte on Wednesday.

India’s largest civic corporation also increased its budget outlay by 7.5% — from Rs31,178 crore last year to Rs33,514.15 crore this year.

This increase in outlay comes with both good and bad news about the taxes you will have to pay. The good news is that the new taxes have not been imposed yet; the bad news is it is just a matter of time.

Kunte announced that in addition to increasing property tax by 40% and water bills by 8% this year, the civic body is also looking for additional sources of income. These options range from a new property tax on slums, a transport cess and a tax on waste collection.

This scramble to find new options comes in the wake of the likelihood of the goods and services tax (GST) being imposed in 2016 to replace octroi, which provides 40% of the BMC’s income currently. However, with no identified sources of income yet to replace Octroi, the civic body seems to be in a precarious position.

This uncertainty, along with the civic body’s shaky financial position — its sources of income are much lesser than expected — meant the budget had hardly any new, big-ticket announcements. The biggest projects mentioned were the ones that are already known — the coastal road, which was allotted Rs300 crore and the Goregaon-Mulund link road, which was allotted Rs200 crore, along with the two long-pending Gargai and Pinjal dams to boost the city’s water supply.

“My focus has been on the ongoing major projects, which should continue smoothly instead of announcing new ones. As there is no clarity on the state’s mechanism to offset the revenue loss [with octroi being replaced], we are planning to increase the existing taxes, along with the introduction of new taxes such as transport tax, waste management tax and property taxes on slums,” said Kunte.

Kunte’s budget, however, focused on smaller civic interventions and a recurring theme in the budget was references to many of the Centre’s pet projects. From initiating a report on how to make Mumbai a ‘smart city’ to ‘branding Mumbai’, which is meant to make the city more investor-friendly. There was also a mention of the recently launched ‘Beti Bachao Beti Padhao’.

The biggest chunk of the budget for new works (32%) will go towards building roads, something that may not go down well with experts. Such a drastic rise comes at the cost of budgets for crucial departments such as storm water drains, essential for making the city flood-free, and water supply being cut down.

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