Finance Commission holds meeting with MoHUA on property taxation by ULBs

The Fifteenth Finance Commission on Friday held a meeting with Union Minister Hardeep Singh Puri and senior officials of the Ministry of Housing and Urban Affairs (MoHUA) on issues including property taxation by Urban Local Bodies (ULBs).

This was in context with the Commission's recommendations for 2020-21, which had mandated the states to notify floor rates of property tax, and thereafter show consistent improvement in property tax collection in tandem with the growth rate of state's own GSDP, read an official release.

In view of the fiscal importance of this matter and especially in the current context of COVID-19 pandemic, the Commission had intense deliberations to help the states and ULBs in having an efficient property tax administration, and to address the rampant undervaluation, scarce information, incomplete property registers, policy inadequacy and ineffective administration, and rectify by appropriate fiscal cadastral with objective tax assessment systems that are progressive, buoyant and equitable to all.

Secretary, MoHUA, Durga Shanker Mishra made a detailed presentation to the Fifteenth Finance Commission and submitted MoHUA's revised memorandum to the Commission for the purpose of the report 2020-2021 to 2025-2026.

The ministry made a series of recommendations which include some non-financial as well as financial recommendations.

The non-financial recommendations include -- change in mandatory conditions of property tax, ambient air quality grant for cities to curb the sources of air pollution, tied grants -- for cities to take up work as per their requirement and priority, including solid waste management, water supply, measures against COVID-19, including separate grants to ULBs for public health infrastructure, 9.4 per cent of central taxes, continuation of urban reforms like planned urbsation, setting up of the regulatory board, auditing of accounts, and catalytic interventions for financial sustainability in 86 city clusters which include 3,331 cities across the country like implementing shared municipal services to improve delivery of citizen services and enhance revenue collection.

The financial recommendations made by the ministry to the Commission include -- bridging the resource gap of municipalities -- a substantial increase in grants for municipal level resources and increase of devolution to municipalities by at least four times, establishing a Programme Management Unit at MoHUA for better management of accounts at a cost of Rs 213 crores, andbuilding of institutional capacities at a cost of Rs 450 crores.

Summing up, the ministry asked for increase in allocation to urban municipal bodies from Rs. 87,143 crore to Rs 3,48,575 crore; harmonization and integration of municipal accounts with State and Central accounts, funds required Rs 213 crores; own revenues enhancement, municipal borrowings and shared municipal services in 86 city clusters, funds required Rs 450 crores.

Separate grant for urban public health infrastructure to the Ministry of Health and Family Welfare, and a separate grant for the regulation of million+citites ambient air quality to Ministry of Environment, Forest and Climate Change were the other recommendations.

( With inputs from ANI )