Lower taxes hit KMC income

Kolkata Municipal Corporation (KMC) expects to report lower revenues of around Rs 450 crore in the current financial year thanks to tax cuts and waiver of water fee, after collecting revenue of Rs 460 crore and reporting a cash surplus of nearly Rs 147 crore in the year 2003-04, Debasish Som, municipal commissioner, KMC, said here today.

"The total earning of KMC has been Rs 720 crore with Rs 260 crore coming from the government of West Bengal in the form of grants, in addition to direct revenue collection," said Som.

Revenues would fall despite higher property tax collection and reduced tax evasion.

Explaining the lowered target, Som said tax rates have been lowered primarily to give the middle class some breathing space.

"KMC has proposed to reduce the tax rate to 30 per cent from 40 per cent for residential properties and to 45 per cent from 60 for non-residential properties. In addition, the trade licence rate has come down by nearly 60 per cent with the sanction fee for smaller buildings being lowered," said Som.

Credit rating agency CRISIL has rated KMC's financial performance with A+ or stable rating and has marked KMC 4 on a scale of 14, with 1 being the best rating score.

This rating was primarily conducted to check the credit worthiness of KMC, Som said.

Kolkata Municipal Corporation has no plans to raise fund from the market as of now, Som added.

Fund-raising would depend on KMC's requirement and market conditions.

With no water fee being collected this year and lower taxes, KMC might see its surplus falling in the current year.

"KMC is undertaking large scale projects in road maintenance and lighting," Som pointed out.

KMC would not undertake new projects unless funds were available.

"Most of the projects undertaken in the past were floundering due to lack of fund but this has changed, he claimed.

"Unless funds are available KMC would not undertake any project," he promised.

Deployment of resources for timely completion of projects and optimal use of resources were focus areas.

Nearly 70 per cent of the revenue earned by KMC was spent on the wage bill.

Som said outsourcing of the non-core activities of Kolkata Municipal Corporation was unlikely as it was a politically sensitive and complex issue.