KARACHI: While it collects property tax from six major cities of Sindh, the provincial government on Tuesday decided to conduct a property survey only in Karachi in an attempt to increase the tax base by bringing more people into the property tax net.

Currently, the Sindh Excise and Taxation Department is collecting property tax from Karachi, Hyderabad, Sukkur, Mirpurkhas, Shaheed Benazirabad and Larkana and the total collection under this head in FY21 stands at Rs1.679 billion, including Rs1.52bn from Karachi alone.

In FY21, Hyderabad contributed Rs77.334m, Sukkur Rs37.501m, Shaheed Benazirabad Rs10.241m, Larkana Rs23.470m and Mirpurkhas Rs11.197m.

Moreover, in the first month of FY22, property tax collection from the six cities stands at Rs129.631m, of which Karachi’s share is Rs120m followed by Hyderabad (Rs5.363m), Sukkur (Rs1.995m), Shaheed Benazirabad (Rs0.906m), Larkana (Rs0.687m) and Mirpurkhas (Rs0.680m).

Collection of property tax being devolved to KMC and district municipal corporations

The last property tax survey across Sindh was conducted in 2001. Under the then president retired Gen Pervez Musharraf’s local government law, property tax collection was devolved to the district government, but the exercise was still performed by the provincial taxation department.

WB-funded project

The reason why the provincial government has chosen only Karachi for the property survey is the $240m World Bank Group-funded Competitive and Livable City of Karachi (CLICK) project aimed at bringing in radical reforms in the infrastructure of the metropolis with a particular emphasis on increasing efficiency of the local government delivery system.

Under the CLICK project, the Sindh government had sought the WB’s assistance to help improve the operational functionality of the Karachi Metropolitan Corporation (KMC), district municipal corporations (DMCs) and District Council Karachi. One component of the project is “improvement of urban property tax system”.

On Tuesday, Sindh Chief Minister Murad Ali Shah chai­red a meeting and approved the World Bank-sponsored Modernisation of Urban Property Tax Administration and System.

“The CM approved to carry out an all-Karachi properties survey to update the property tax database and also approved development and upgrade of information technology system to house the property tax database and provide related training,” stated a press release issued from the CM House after the meeting. It also said the modernisation of urban property tax administration and system, to be carried out with an estimated cost of $40.4m under the CLICK project project, is aimed at identification and digitisation of under-assessed and un-assessed property records so as to increase the tax base to improve revenue collection under the property tax head in the city.

The project includes procurement/development of a robust Urban Immovable Property Tax (UIPT) system to effectively identify and tax urban properties in Karachi and to strengthen the capacity of the excise and taxation department on modernised UIPT collection, including strengthening of human resource through trainings and provision of infrastructure considering long-term sustainability.

The CM told the meeting that the urban immovable property survey would improve the tax base and the geographic information system (GIS) component would help urban planning authorities to plan and execute sustainable infrastructure.

He said it would automate the property tax assessment and printing of challans and also help in providing a GIS mapping framework for the identification of all buildings.

The meeting was informed that the new survey would be conducted for an estimated two million properties of Karachi.

CM Shah said that in 2021, only 800,000 property units in Karachi were being taxed for property and after the survey, the property tax collection would increase to Rs3.63bn from Rs1.72bn in the last fiscal year.

He decided to devolve the collection of property tax to the KMC and DMCs, and constituted a ministerial committee to work out the devolution mechanism. “Let them collect themselves and utilise [it for] the development of the city,” he told the meeting.

The CM directed the local government and excise ministers to sit with the Sindh chief secretary and evolve a mechanism to devolve the property tax to KMC and DMCs.

Published in Dawn, September 8th, 2021