Poll effect: BMC to earn Rs 700 cr less

The BMC is likely to earn hundreds of crores less in revenue than expected this year, because of the delay in implementing the new property tax system — and this shortfall is likely to affect municipal projects such as roads, subways, dispensaries and marketplaces.

The BMC is likely to earn hundreds of crores less in revenue than expected this year, because of the delay in implementing the new property tax system — and this shortfall is likely to affect municipal projects such as roads, subways, dispensaries and marketplaces.

HT Image

Unwilling to anger voters ahead of the municipal polls in January, the ruling and opposition parties in the BMC are dragging their feet on enforcing the new property tax system, which would see taxes rise as levies are recalculated based on the capital value rather than the rental value of the property.

After octroi, property tax is the BMC’s second largest source of revenue and the BMC was expecting at least Rs 3,600 crore in property tax revenue this year, up from Rs 2,900 crore last year, thanks to the new system.

The delay in enforcing the new system is now likely to cause a revenue shortfall of Rs 700 crore in financial year 2011-12, affecting BMC spending and allocations for municipal projects.

Meanwhile, the clock is ticking — the pre-election code of conduct is likely to come into effect in four weeks, after which it will no longer be possible for the new property tax law to be enforced until after the results of the election are declared.