Chennai Corporation passes resolution to hike property tax by 6%

Greater Chennai Corporation Council passes resolution for 6% property tax hike, effective from October to March, amid opposition.

Amidst hue and cry, the Greater Chennai Corporation (GCC) Council, on Friday, passed the resolution that allows the civic body to hike the property tax rates by 6%.

It is likely to be effective from the second cycle — October to March. The date of implementation will be decided by the State government, said civic officials.

At the Council meeting, Councillors belonging to alliance parties of the ruling government — the Left parties and Viduthalai Chiruthaigal Katchi (VCK) — and the Opposition party, All India Anna Dravida Munnetra Kazhagam (AIADMK), staged a walkout when Mayor R. Priya announced that ‘the ayes have it’ and the resolution for hiking tax rates had been passed.

The hike follows a government order dated September 5 issued to the Chennai Corporation Commissioner, Directors of Municipal Administration and Town Panchayats, all district collectors and regional directors of Municipal Administration. Tamil Nadu Urban Local Bodies Rules, 2023 also mandates the annual hike.

According to GCC officials, the increase is a condition for availing Centre’s grants as stated in Chapter 7 of the 15th Finance Commission report — “For all local governments, both urban and rural, web-based availability of annual accounts for the previous year and audited accounts for the year before previous is an entry level qualification for grants. For urban local bodies, an additional entry level condition for receiving grants is the notification of minimum floor rates of property taxes by the relevant State followed by consistent improvement in the collection of property taxes in tandem with the growth rate of State’s own gross state domestic product [GSDP].”

It further states, “For historic reasons as well as because of vested interests, property tax yields remain negligible in India. We recommend that to qualify for any grants for urban local bodies in 2021-22, States will have to appropriately notify floor rates and thereafter show consistent improvement in collection in tandem with the growth rate of the State’s own GSDP.”

Meanwhile, councillors condemned the move saying that this would affect the working class. Ward 7 councillor K. Karthik of AIADMK told mediapersons after the meeting, “The annual 6% increase is not right. During the discussion at the Council, Deputy Mayor M. Magesh Kumaar said that the Central government has directed the State government to impose the hike. Higher authorities further claimed that if the orders are not followed, some funds from the Centre may not be released. But, as per the resolution, this is following a State G.O. [government order] issued on September 5 that mandates a 6%-increase in property tax every year. This is purely Dravida Munnetra Kazhagam’s move, and the blame is passed onto the Central government. Yet, if it is the Centre asking the State, both are in the wrong for effecting the hike,” he charged.