White Paper wants property tax collection enhanced

‘This will increase the self-reliance of urban local bodies’

The White Paper, presented by Finance Minister Palanivel Thiaga Rajan on Monday, described as “critical” the task of enhancing property tax collection by urban local bodies. Pointing out that the introduction of the Goods and Services Tax implied that “the State’s ability to take up additional resource mobilisation measures in a major area of State taxation is considerably constrained”, the document said the enhanced property tax collection would “increase the self-reliance” of the urban local bodies and reduce the burden of the State augmenting local bodies’ resources through scheme grants and devolution. Also, this would “bring in more public resources for infrastructure creation and effective service delivery”. The 15th Union Finance Commission had recommended that the urban local bodies, to be eligible for its grants, fulfil the entry-level additional mandatory conditions. The stipulations included “fixation and operationalisation of minimum floor rate” for property tax in 2021-22 by the State concerned, “consistent improvement” in the collection of the tax in tandem with the growth rate of the Gross State Domestic Product (GSDP) and “timely placing” of audited accounts in the public domain. The condition of notifying the floor rates in 2021-22 would apply to the State for receiving the Commission’s grants from 2022-23. Dwelling on the issue of periodic revision of the tax in view of the recommendations of the State and Union Finance Commissions, the document talked about the target of 0.6% of the GSDP fixed by the Fifth State Finance Commission for 2021-22 and said this was reduced by the State government to 0.25%.