Sindh govt decides to devolve property tax collection to DMCs

KARACHI: The Sindh government in collaboration with the World Bank has decided to devolve property tax collection to the local bodies’ district municipal corporations (DMCs) for which a proper data base and capacity building of concerned local bodies staff would be undertaken shortly.

This decision was taken by Sindh Chief Minister Syed Murad Ali Shah in a meeting with a World Bank team led by Senior Economist Ms Yoonhee Kim and included Urban Development Specialist Shoaib Athar, Public Sector Specialist Irum Touqeer, Urban Development Specialist Takaaki Masaki and others.

The Sindh government delegation led by the chief minister comprised Minister for Local Government Jam Khan Shoro, Mayor Karachi Mohammad Waseem, Principal Secretary to CM Sohail Rajput, Secretary Excise Haleem Shaikh, the chairman for DMCs and others.

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The chief minister in his opening remarks said that he had already devolved the property tax collection to local bodies department in Karachi Metropolitan Corporation (KMC) but they had to develop a proper system for collection. He also said that property survey of Sukkur had been conducted.

“There were only 35,000 households registered for collection of property tax but the fresh survey has revealed an amazing figure of 65,000 houses fit for levy of property tax,” he said.

The world bank team through a presentation told the meeting that the current collection of property tax in Sindh was Rs2 billion while there was a potential of Rs7.2 billion.

The world bank said that the tax base had been eroded by virtue of very generous exemptions. It was also pointed out that the administration of property tax is based on ‘old’ system technology, current billing system is not fit-for-purpose.

They recommended a self-assessment and self-payment platform for property tax customers as need of the hour. The property tax arrears constituted a major problem and significant loss of revenue, they said.

The world bank suggested devolution of Urban Immovable Property Tax (UIPT) to the local bodies’ DMCs. On this the chief minister said that the local councils of Karachi – DMCs – did not yet had the capacity to administer UIPT collection functions, in the absence of staff trained in property tax law and procedures, and there were lack of IT capabilities. He added that he had already issued directive to the local bodies to develop an efficient system.

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In the meeting, it was agreed to take immediate measures within the next three months. These measures include agreement and legislation about UIPT devolution, road map, institutional arrangement and survey preparations and their launch.

The bank also suggested phase-I (July 18 to June 2020) in which survey would be completed along with preparation of property tax data base. An improvement would be in tax payers’ services. Training and capacity building of DMCs staff identification, procurement, pilot deployment of ICT system for DMC would be undertaken.

In the phase-II (July 2020 to June 2023) legal reforms, introduction of a self-assessment and self-payment system. The valuation methodology and updating valuation table would also be made and exemption and relief system would also be reformed and it was agreed upon that the enforcement powers would be strengthened further.

It was decided to undertake a full survey of all buildings in the six DMCs of the city; to collect qualitative and quantitative data for each building, including property use; to collect the GPS co-ordinates for each building including digital image and to build upon the experiences from Sukkur and with participation from ETD and DMCs.

It was also decided to establish an IT Revenue Management System (IRMS) for DMCs. There would be a hardware and software determined host for the data server. DMC staff will be involved in the building survey and they would be provided training in the new IT Revenue Management System, training in property tax management including valuation, law, billing, collection and enforcement and taxpayer/customer services training.

The chief minister directed the excise department to identify and legislate changes whatever needed to support a modern, ICT-based, Revenue Management System.

“We would also bring in legal reforms needed to move to a self-assessment and on-line self-payment system,” he said.