On the house?

AAP's proposal to waive property tax is impractical

The Aam Aadmi Party’s (AAP’s) 67-seat majority in the 70-seat Delhi Assembly in 2015 presented it with an invaluable opportunity to deliver honest and efficient governance, the core of its election campaign. Its middling performance since has much to do with the maverick personality of Chief Minister Arvind Kejriwal who has wasted time and political capital chafing against the constraints of Delhi’s status as a state-cum-Union Territory — the proximate reason for the first AAP government lasting 49 days in 2013. Mr Kejriwal’s latest proposal to waive property tax if he is voted to power in the municipal elections of April 23 only underlines his decidedly strange notions of governance. The chief minister must be aware that Delhi’s municipal finances are a mess. 

Neither Mr Kejriwal nor the Bharatiya Janata Party (BJP), which controls all three of the city’s corporations, is entirely responsible. The corporation was trifurcated in 2012 under Sheila Dikshit’s chief ministership, a move that expanded costs three-fold since each municipal body needed its own administrative staff, but not revenues. The upshot of this has been expanding debt — Rs 1,000 crore for the North Corporation and Rs 500-600 crore for the East Corporation (the South Corporation, which covers more affluent areas, is debt-free but does not make profits) — and a wave of strikes by unpaid employees that left parts of the city inundated in garbage. Property tax accounts for about 16 per cent of the Rs 8,351 crore collected by the three corporations. 

The chief minister has not explained how he plans to bridge this deficit — doubly worrying considering the routinely tardy release of state government grants. His ostensible reason for scrapping property tax is that it entails harassment by municipal authorities since it is computed on the basis of land values. Also, evasion is rampant. Both are valid points. Of the 2.5 million houses in all three corporations, only about half pay property tax. But this does not differ appreciably from compliance levels in developed country municipal bodies and, in fact, underlines the need for improving collection methods — including GPS mapping to cover all properties. In fact, this proposal represents a volte face from Mr Kejriwal’s position just a year ago when, documents reviewed by DNA newspaper show, his government has been exhorting the corporations to increase house tax and clamp down on evaders for the past two years.

To be sure, Mr Kejriwal is not the only one to be tempted by this bait. In November 2016, the standing committees of all three corporations extended a 100 per cent waiver on payment of penalties and interest on property tax payment till February 28, 2017. The idea here, however, was to encourage basic compliance, since the arrears come to some Rs 2,700 crore. In 2015-16, the North Corporation’s proposal for a 50 per cent increase in property tax, underlining its importance in municipal revenues, was rejected by councillors as being politically risky. Mr Kejriwal’s proposed waiver may well be linked with nervousness after the AAP’s poor performance in state elections and the BJP’s stunning victories. But as an example of responsible governance, it leaves much to be desired.