MMC Act amendment hits another roadblock

The bill to amend the Mumbai Municipal Corporation Act, 1888 (MMCA), which aims to introduce capital-based property tax system in Mumbai, failed to get clearance from the joint select committee of both the houses again.

The amendment is expected to bring parity in the property tax structure of the island city and the suburbs.

For the effective implementation of the amendment, the committee felt that there was a need to also amend seven more acts such as the MHADA Act and the Bombay Port Trust Act (BPCA).

The committee has decided to seek legal opinion from the state government's law and judiciary ministry on how to carry out amendments to these statutes.

At present,the property tax is collected in Mumbai on the ratable value. But since rents have been frozen at the level of 1948 under the Rent Control Act, the ratable value of the property has not been revised.

So owners and tenants of properties in south and south-central Mumbai, where the property prices are much higher, continue to pay taxes at the 1948 level.

However, since the buildings are comparatively new in the suburbs, they attract a higher ratable value and the occupants of such buildings have to pay a much higher property tax compared to those living in south and south-central Mumbai.

Since the Rent Control Act covers a large number of buildings in the island city, the MPs, MLAs and corporaters are opposing the move to shift to the capital value system of the property tax.

They claim the move would effectively result in eviction of lower middle class families from nearly eight to nine thousand chawls in the island city. They want the bill to include safeguards to protect the interest of people from the lower economic strata of the society.

However, the biggest beneficiaries of the ratable value of tax system are owners of large bungalows on Malbar Hill and such posh localities and large corporate houses that have offices in the heritage buildings of South Mumbai, who continue to pay low property taxes.

Due to the stiff opposition from elected representatives from both the ruling side and opposition, the state government was forced to refer the bill to amend MMCA to the joint select committee of both the houses. The state government had introduced the amendment bill in the monsoon session of 2006.