The BBMP has recently decided and communicated its method and metrics for property tax collection from Bangaloreans. The reclassification of tax zones has led to an increase of at least 33 per cent for all properties whose zonal classification has changed. And the new tax policy keeps revising once every 3 years, with a mandatory 15 per cent increase. The Citizens Action Forum of Bangalore is taking objection to the new scheme.

Background

Property Tax has been bothering the citizens of Bengaluru for more than a year now. And even after a year the confusion has not lessened. Probably what has changed is the kind of confusion but not the degree.

It was in the year 2001 – 2002 that BBMP, plagued by a static level of collection of property taxes in Bangalore city, came out with a novel method to boost its revenue from property taxes. It brought out a system where the entire calculation of the incidence of taxes was to be done entirely by the property owner. The BMP, then, promised that the returns filed by citizens will be accepted at face value except for a random checking of 5 per cent of the returns, and further, there will be no revision of taxes for the next 5 years.

Enthused by this, citizens filed their returns in large numbers and the revenue of BMP rose from Rs.116 crores to Rs.240 crores in a matter of three years. It was beyond their expectations. This scheme was supposed to run till 2006 – 2007.

New areas were also added by amalgamating 7 CMCs and 1 TMC around Bengaluru along with 110 villages. With this, BMP became Bruhat BMP or BBMP. The area increased from 225 sq kms to 750 sq kms. The condition of civic amenities in the merged areas was pathetic.

In the year 2005, the tenure of the then BBMP Council came to an end and the government, instead of holding the elections, abolished the council, took over the administration and appointed an administrator as its representative to look after the affairs of BBMP.

In the meanwhile another significant development took shape. The Karnataka Government, through an amendment to the KMC act in the year 2002 brought in the Capital Value System (CVS). This, then, became the basis on which property tax was determined in cities throughout the state. Bangalore was left as an exception, where the ARV system under SAS was in vogue till 2006- 07.

Following the rollout of CVS in other Karnataka cities, the Karnataka Government brought in a legislation making it mandatory for CVS to be implemented and BBMP decided to impose the CVS system in Bengaluru as well. This happened at a time when the property rates of Bangalore were growing exponentially and recorded over 300 per cent growth in property valuation during 2003 – 2006.

The Government of Karnataka had already started bringing out new guidance values every year instead of once every 5 years, which was the earlier practice. This was primarily done to increase the revenue to the state exchequer by way of increased registration charges for all property transactions. As an example, the guidance value of 2006 for some areas went up by more than 2.5 to 4 times its earlier values.

Under these circumstances, the introduction of CVS system brought in a situation wherein the property taxes increased from 1.5 times to more than 12 times across all areas of Bangalore. Citizens were up in arms against this steep and unjustified hike in property taxes. The Citizens Action Forum (CAF) took up this issue and organised workshops, seminars and public meetings to highlight the problems. [To be continued]

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