Deficit: What you have left after paying your taxes….
Arnold Glasow.
An American businessman and humorist; Arnold was
cited frequently in the Wall Street Journal, Forbes, the Chicago Tribune and
many other major organs. The witty businessman has summated the entire
taxation rather financial functioning of any organization is just one sentence
& that’s why he is one of the all time greats in finance world! Well, I am not a finance guy rather taxation
is one thing I am still trying to understand even after so many years in the
business & I am sure there are thousands or millions of alike me around! So
when my writing idol Mukund Sangoraam, who is editor of Loksatta & whose
editors columns has been inspiration for my writing, called me up about asking
me someone who can write an article about the infamous LBT & models of
revenue generation for other city’s councils around the world i.e. like we have
municipal corporations, I referred name of few of my friends in the field who
can write about the subject. We did discuss few aspects of the subject & he
hung up. Yet the topic remained in my mind as its background is somewhere
related to the city & in indirect way to the real estate of the city! Agreed,
I won’t be able to analyze the LBT or any tax module as that’s job of a financial
men & we have many around yet as a common citizen of the city, I am always
curious about the functioning of the system which we call PMC i.e. Pune
Municipal Corporation & which is supposedly responsible for the entire
infrastructure; rather infrastructure is just one aspect, its entire well being
of the city. It engulfs right from education to traffic to every essential
service an urban citizen needs to the planning of growth of the city. In nutshell job
of PMC for the city is like managing a home where the head person of the family
has to think of earnings of the family & balancing the same with the needs
of every family member for its living in good state.
On this background a common citizen is always confused just
the way I am over the news like Municipal Corporation Staff will go to strike
if LBT is waved of as was promised by the present state govt & on other
side the trading community, popularly quoted as “wypari warg” i.e. Business men who majorly are shop keepers
from all sort of commodities, will be going on strike from 31st Dec;
if the LBT is not waved off! Interesting, isn’t it? So what’s LBT in first
place & why it has become so vital for our beloved Pune city suddenly? On a
very general definition LBT is local body tax, means on any sale of a commodity
in the city limits, some percentage of the sale amount has to be paid to the
local body which in our case is PMC. This money is supposedly to be collected
for the day to day operating of PMC as well it’s the major revenue for the
services i.e. infrastructure which PMC is supposed to provide its citizens.
Here many will ask how the revenue was being generated before then, when LBT
wasn’t there. Then there was famous “Octroy” i.e. “Jakat”, which was imposed on
entry of any domestic goods to be utilized within the PMC limits. It was
charged again on basis of some percentage of the purchase receipt value of the
goods. But then it’s outdated system of revenue & has been removed from
most of the cities in the country & to my knowledge it was another condition
put of PMC to remove Octroy for getting funds from central govt under various
schemes like JNNURM, a central govt funding scheme for the urban cities! And
then the system of octroy was always in grey shade i.e. the way it’s been
implemented & the way few people were operating as octroy agents & can
get anything in the city without paying nothing or minimum octroy on goods.
Whatever was said about the octroy yet it contributed to nearly one third of
the revenue of the PMC budget & as it’s removed the PMC required to have
another option to fill up the hole in their pocket by removing octroy &
here comes LBT in picture!
As octroy was contributing nearly one third of the entire
revenue of PMC, it came up with LBT from the traders in the city & this is what
being opposed now. Now let’s see first why PMC needs the money in first place?
To run a city of size Pune is huge task, it’s like running a large industry as
city needs services right from road to drainage to water supply, public health,
education, recreation & many such. And all these services needs money on
two fronts, first is for keeping them in operation i.e. salaries of the doctors
& all the staff as well teachers in municipal school & along with salaries
of the staffs in administration in various departments. At the same time to
keep the services in operation we need electric supply & lots of maintenance
material & all this needs money. Public transport is also funded through
the revenue only. Second is city is ever growing so new infrastructure has to
be added always & that needs money for acquisition of the land for the same
as well construction cost of the services like roads, drainage treatment plants,
water treatment plants, school as well hospital buildings, roads & the list
is on. Now we are talking about Metro & it will also need thousands of
crores of rupees, so from where all these money is going to come? And ultimately
all these services are what make life of a citizen good, which is in the end
buyer of real estate industry.
Let’s see what other sources of revenues PMC has, as its not
only Octroy or LBT which will be sufficient for the needs of the city. We have
revenues coming from the various premiums for the new constructions coming up
in the city & we have property tax which is generated from the residents of
the city. And here is where main concern is. As firstly if we fail to provide
good infrastructure then people will keep away from the city, which is what
happening now as PCMC i.e. pimpri chinchwad corporation is in our neighborhood
& many people are opting to reside there for better infrastructure &
then due to very high land costs many people are opting to reside in collector
area i.e. area which is out of PMC limits. And lesser buildings mean lesser
revenue from building premiums. Second is property tax & here by PMC survey
itself nearly 40% people stays is slums who hardly pay any property tax &
then nearly 20% people stays in illegal buildings so they too don’t have any property
tax as the buildings themselves are illegal! But the slums as well illegal buildings
residents are using all the civic services right from roads to water to
drainage & not paying anything for the same! This means 40% of citizens are
paying for the services which are being used by 100% citizens of the city,
which is unjust!
So first of all we need to ensure every person who is using
the services of the city is paying for it, this will increase revenue in large
way & for that if they are not paying property tax by the present model
then come out with some other means by which the revenue for enjoying the civic
services will be ensured. Like tie up with their salary or daily earnings the
property tax & get it cut directly on monthly basis if they are not paying
by property tax bills. I know this is just a wild thought but worth thinking of
as any way we are not getting a single rupee from this sector against property
tax is a fact! Then look out what other such cities not only in other States
but other countries are doing for their revenues. Like in USA if the plot has
been kept vacant & not being used for the purpose it has been reserved then
the plot owner has to pay nearly ten times property tax. This ensures the plot
is being used for the development & comes in the use for the purpose; thus
either residential or for any service but it comes under use. Another important aspect in western countries
is, services like water supply as well public transport has been privatized so
they are being run like a private corporate & revenue as well quality of
service is assured. For e.g. providing water
via meters is a prolonged issue which our rulers i.e. elected members are not
acting upon just to make their voters happy & we are losing revenue in huge
way on the same. In most of the western countries water supply is by some
private company which charges rationally for every drop being used by the resident
of the city. Same is the story with public transport as we keep on reading
hundreds of crores of rupees spent on the PMPML i.e. our public transport
system, yet it’s in loss & nobody is happy with its service to the
commuters! In all other cities in western countries & even in Singapore,
public transport is run by private companies, ensuring revenues as well its
good service.
Recently the news was PMC has appealed to State as well
Central govt for funding them for acquiring lands for various purposes as the
new acquisition law makes it mandatory to pay double the land rate to the
owner. Here why can’t we make TDR i.e. FSI given in lieu of the land thrice
making more people go for the TDR option & again this TDR will be put to
use in city construction only? Every time when the FSI or TDR terms are
mentioned its hohallah that it’s in favor of builders, well then even one FSI
or TDR is also in favor of builders only so abolish it & stop all the
construction in the city! Do remember it’s not the FSI or TDR but it’s the infrastructure
of the city which makes a city good or bad & if that itself is not being
achieved by our policies then it’s high time to look inwardly & then make
new policies!
Right now we are in vicious circle as no infrastructure so no
additional FSI, no additional FSI so no more numbers of home & no more
numbers of home so the cost of available homes is going high & so people
are opting to stay in illegal buildings or slums which again ends up in loss of
revenue & then things like LBT came which again are opposed by the traders
or the respective community. Let’s remember
no tax can be justifiable if it’s not being put equally on all the segments.
At the same time there was a sess (a form of lavy or tax) put in the form of
stamp duty in the properties which are in PMC limit, again what happened to the
amount collected from this sess & what’s its utilization in civic works is
a mystery! This is era of information & transparency
is the word! People don’t mind paying taxes provided they know what happened to
the money they paid in the form of tax & on this front also PMC is lacking
very much. Years after years projects like BRT i.e. bus rapid
transport, keep on going & never come in full form to serve the citizens. The
way a project like cycle tracks is being executed is the biggest joke of the
city & because of this when we try to put on new means of revenue, oppose
is going to be there!
See that more & more people comes to reside in this city
& for that faster, transparent system of sanctioning new homes has to be in
place, making the homes affordable to all classes of the society! Need of the
time is make a single tax system which will be uniform for all segments of the
city & then see that it works. Also give every rupees accounts earned as
well spent & let the results speak & not the balance sheet as the common
man is more interested in outcome of what he has paid in taxes! Real estate is
not an enemy of this city but is very much part of the city; actually it’s the system
which has made it look like biggest enemy of the city! And all this
is needed to be done in fastest possible time span; as the time has already
gone & making more delay in deciding means of revenues means a sure end of
the city. This truth is what our rulers
have to understand than just thinking of their respective vote banks. Or else
the day isn’t away when voters will be there but nothing left to vote for!
Sanjeevani Dev.
Please do visit my blogs to know about our philosophy at Sanjeevani ! (Click the links below)
http://visonoflife.blogspot.
http://jivnachadrushtikon.
Social Side of Sanjeevani ! (Click link below)
http://www.flickr.com/photos/
For any of your complaints about city, log in at link below
http://www.punecorporation.
Think Green, Think Life
www.sanjeevanideve.com
Posts
No comments:
Post a Comment
Please leave ur name, email id along with ur comment. It will help me to reply ur comment as well improve the blog as per ur suggestions if any... :)
Sanjay