For steady revenue, BMC may introduce new taxes in budget

  • Poorvi Kulkarni, Hindustan Times, Mumbai
  • Updated: Feb 03, 2015 00:45 IST

It is unlikely that the civic budget will have any good news for Mumbaiites on Wednesday. The subject of new taxes to be levied on citizens is likely to be announced in the 2015-16 budget, said civic sources.

Transport cess and solid waste management cess are two new forms of taxes that might be proposed by the Brihanmumbai Municipal Corporation (BMC).
There is, however, no clarity yet on how much and from when these taxes will be imposed.

The civic body has been mulling over the introduction of tax on waste management for the past two years, as it was mandated by the JNNURM reforms.
The BMC is also likely to begin assessment of slum structures to work out the formula to levy property tax on slums.

Civic officials said deliberations on the new taxes are a result of the Central government’s push for the levy of goods and services tax (GST) by 2016, which is expected to boost the country’s economy.

With the passing of the Bill, the civic body will lose its right to levy octroi on goods that enter its limits, as all indirect taxes levied on traders will be centralised and unified under the GST regime.

“We will have to introduce reforms in our revenue assessment and collection. New taxes may have to be introduced to keep up our revenue requirement,” said a senior civic official.

Octroi earns the BMC a revenue of more than Rs7,000 crore — which is 35% of the civic body’s annual income. “We aren’t sure about the share that we will get from the GST and how regularly we will receive it. The buoyancy of octroi may not be retained in this. To sustain the services we provide, there is no option but to create other sources of revenue,” said another official.

The BMC currently charges municipal education cess, tree cess, street tax and fire tax as part of the property tax.

A consultant has been appointed to review current costs of services the BMC provides to different categories of consumers. The consultant will study the taxation and grants of municipal corporations of six international cities.

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