There are more than one issue with AAP’s promise of no property tax by MCD

AAP supremo Arvind Kejriwal, who has now shifted his focus from Goa and Punjab assembly elections to the Municipal Corporation of Delhi’s elections, promised on Saturday that if AAP was voted to power they would proceed to waive the residential property tax that the homeowners in the Delhi-NCR have to pay.

Such a populist and far-fetched promise is not a new thing for the AAP, which had earlier promised free Wi-Fi, 15 lakh CCTV cameras, free water, and lower electricity bills in the past. This promise by the AAP though has serious issues around it.

The first issue raised by many experts was a constitutional roadblock, where it was argued that AAP, or for that matter anyone who wins the MCD polls, won’t be able to do it of their own, for the Tax can only be waived if there’s an amendment in the Delhi Municipal Act, 1957 which can only be done by the Parliament.

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AAP leader and Delhi’s Deputy Chief Minister Manish Sisodia though has refuted this view of the experts and has claimed that two amendments were made to this act in 1993 and 2011 without parliament approval and the same can be done in this case.

Now there is another issue that has been pointed out by many. Even if the Tax is waived off without needing Parliament’s approval, it may have serious repercussions about the smooth and efficient functioning of the MCD.

As it turns out, the Property Tax accounts for a substantial part of the total revenue MCD generates. In the year 2016, of the total 8,351 crore revenue the 1,371 crores came from the Property Tax.

The potential loss of at least 1,371 crores has MCD officials understandably worried. The officials lamented that MCD was already facing a cash crunch and the loss of Property Tax revenue would mean more trouble.

VP Pandey, leader of house, North Delhi Municipal Corporation claimed that as it is they didn’t get their dues from the government on time and further wondered from where would they get the money to cover their expenses.

A lot has been talked about the financial crisis which the MCD has been experiencing over the years.

In 2010 the MCD was known to have been riddled in debt of over 2800 crores. The situation had scarcely improved in 2015. As per a report, thanks to a three way split of Municipalities in 2012, the East and North Municipalities have been perpetually riddled in debt.

The East Municipal had been running losses of about 500 crores and in 2015 had failed to pay salaries of 45% of its employees. This report also mentioned about how the Property Tax was a significant source of revenue for the Municipalities and one of the reasons the East Municipality was having troubles was lower property tax collection as compared to the two other municipalities.

The North Municipality too ran a revenue deficit of about 1000 crores. And remains dependent on government grants. One can only imagine what the situation would be if the Property Tax to ends up getting snatched from the Municipalities.

 


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