BBMP should follow Pune on cesses

BBMP should follow Pune on cesses

Cess must be the last resort as there are revenue sources, which are still untapped.

A proposal for two additional cesses for transport and road infrastructure is under consideration with the Finance Department of the Bruhat Bangalore Mahanagara Palike (BBMP).

If approved by the state cabinet, these will be levied on property tax from the next financial year. Property tax is a major source of income for the BBMP and is already burdened with cesses for beggary, health, library as well as solid waste management.

Nobody likes to pay a lot of tax. But most people understand that it is a necessary evil. The government needs to provide certain essential services and it needs to generate revenue for the same through taxes. A cess is different from a tax in the sense that it is a tax on a tax. Also the money collected from a cess can be spent only for the purpose it is collected.

But is a cess really necessary right now? It does not make sense to charge all property owners a cess when the BBMP itself possesses properties which can fetch it much more revenue.

On-road parking space is a huge asset, which the municipal corporation has completely ignored up till now. A recent study by the Takshashila Institution indicates that even by conservative estimates, a paid parking scheme has a potential to generate Rs 530 crore of much needed funds for the BBMP annually. This is not a new idea. Many cities across the world have successfully implemented such schemes and reaped the benefits.

Just this month, the Pune Municipal Corporation came out with its draft public parking policy. It is a very progressive attempt at pricing this very important and scarce commodity. A three-tiered approach with different pricing for the Central Business District, High Mobility Corridor and Residential Areas has been proposed.

Different rates for short duration peak hours and discount for residents is also considered in the policy. Bengaluru should look closely at what Pune is doing since the two cities share similar concerns of rapid vehicular growth and congestion in core city areas.

The reason why cesses have become so popular recently is because they are very easy to implement. When people are already paying a certain tax like a service tax or property tax, it is easy to piggyback another one on top of it. Politicians are also every susceptible to public opinion. They generally do not like to suggest, let alone implement, something which might be perceived as unpopular. This is where our task as enlightened citizens of this smart city comes in.

We need to realise that schemes like paid parking are not a bad thing. There is a pain involved in accepting that something we assumed to be free, will now be charged. But if we can get over that feeling of entitlement, then the benefits will be high for everyone in the city. It will be much better than paying a cess on the property tax.

Paid parking

The problem of congestion cannot be solved by adding more roads or flyovers. There needs to a disincentive to the use of private vehicles. A paid parking system is complementary to the goal of a transport system. It is a measure, which will benefit everyone including the private vehicle owners. When congestion is reduced, it helps the pedestrians, cyclists as well as the vehicles on the road, which can get to their destination faster and with less hassle.

There are other advantages like reduced air and noise pollution. Many cities like London, Singapore and Stockholm have implemented systems where car owners are charged for the amount of road use. This is known as congestion tax.

It achieves the goal of decongesting the roads and generating revenue for the government. This revenue can then be used to improve the public transport infrastructure of the city. And all this without levying any additional taxes.

Paid parking or congestion tax gives the choice to an individual. I have to pay only if I park on the street. Not if I choose to use public transport or a cab instead. But a cess is a forced payment (unless you sell your property and move to a different city).

Paid parking gives more freedom and nudges people in the direction, which will be beneficial for all. In fact, it gives more freedom to the corporation as well since the revenue collected through a cess can only be used for that purpose while revenue collected from fees can be used where it is needed most.

A cess, if levied, should also be equitable. It means that everyone should pay their fair share and get the public service that it is intended for. But how do we decide what that share is? The property a person owns has very little bearing on how much time that person is spending on the roads or in public transport. If you are wondering, a Swachh Bharat cess on service tax also does not make any sense in this regard.

(The writer is a scholar, Centre for Smart City Governance, Takshashila Institution, Bengaluru)