The Capital Value System (CVS) of property tax proposed to be introduced by the Bruhat Bangalore Mahanagara Palike (BBMP) from April 1 is causing a lot of concern among the citizens and rightly so. The BBMP’s need to augment its resources to meet the ever-growing demands of infrastructure in the City is understandable, but the way a new taxation measure like CVS is being pushed through is undemocratic. The BBMP is functioning without an elected body since November, 2006 and a major policy decision like switching over from the existing Self Assessment Scheme (SAS) to CVS should have been taken up only after the election. Conversely, the BBMP officials should have initiated discussions with citizens’ groups before trying to introduce a scheme which affects a large number of people.

The BBMP has fixed the rate at 0.25 per cent of the capital value for residential self-occupied buildings, 0.5 per cent for rented residential buildings and 0.2 per cent for vacant sites. The rate for industrial and commercial properties has been fixed at 1 per cent and 2 per cent of the capital value respectively. Though the officials claim that the average rise in the rate of tax will be in the range of 30 to 60 per cent, there is no clarity on this score. Though less than a fortnight is left for the scheme to come into operation, the BBMP is yet to come out with specific details of area-wise changes in the taxation structure. Meanwhile, some random calculations made by the citizens as well officials show that under CVS, the property taxes could skyrocket upto 1,000 per cent!

Bangalore once prided itself being a “pensioners’ paradise” and continues to be so at least in old parts of the City where senior citizens live in houses built decades ago. Now,  BBMP’s move to change the tax structure from annual rental value of the building to market value would put an enormous burden, which many citizens may find impossible to bear. Besides, the BBMP in its eagerness to earn revenue appears to be “penalising” old-time residents. With rampant commercialisation of many areas, just because the value of the self-occupied houses has gone up, their occupants will not be able to pay exorbitantly high property tax from their meagre income. CVS has thrown up many issues which need be debated thoroughly, and as the elections to the state Assembly are not far away, the Governor’s administration will do well to put off the decision till an elected government is in place.