Focus on detecting taxable property

Bangalore: A state cabinet sub-committee is still analyzing the possibilities of scrapping the capital value system (CVS) of property tax collection in Bangalore . International examples , though, suggest ensuring streamlined tax-collection depends more on administrative will than the model of taxation.

Lawrence C Walters , professor of public policy and management at Romney Institute of Public Management, Utah, while presenting a paper during an international conference on public policy and management, said ability to realize the potential of land-based tax critically depends on quality of governance.

The paper - on land-based approaches for infrastructure funding, done in association with Gary C Cornia, dean, Marriott School of Management, Utah - tries to establish through examples from different countries that revenues could be 'substantially increased ' without altering the legal base or the tax rate but by focusing more on detecting and valuing taxable properties . Wa l t e r s told The Times Of India on Wednesday property taxation models in India (apart from 77 other countries ) were analyzed. The study takes into account IMF statistics on GDP and property tax collections of the 78 countries, in one or more years between 2004 and 2006.

The Bangalore example

The Bruhat Bangalore Mahanagara Palike (BBMP) maintained, through the recent debate on CVS, that the model of taxation was not as important as the process of valuing properties. During a public discussion, residents also urged the BBMP to focus on bringing evaders under the property tax net.

The study explains that governance does not affect property tax results as much as it does property tax capacity. Administration of a property tax system has to go beyond the legislative definition of what is to be taxed and at what rate. The key is the administrative will to maintain accurate tax rolls, properly valuate taxable properties, bill and collect tax and provide services to the taxpayer.

Interestingly, while better governance has positively impacted land-based tax collection, property taxes raised by countries, still, comprise only about 1% of their GDPs.

40% of taxable properties outside tax net

In Bangalore, conservative estimates have it that about 40% of taxable properties are not under the tax net. The study cites the example of a country that, typically, identifies 80% of taxable properties (the researchers add that the figure is high for many countries). Assuming that these properties are valued at 90% of their actual value and tax collectors collect 90% of the taxes levied, the actual collection will be less than 65% of the possible collection.

Research holds the key

Bangalore: Governments need research-based inputs to brace for modern-day administrative challenges, A Ravindra, former chief secretary, said on Wednesday. He was speaking at the culmination of a four-day international conference on public policy and management organized by the Centre for Public Policy (CPP). Citing examples from the public health sector, Ravindra said civil servants are not likely to effectively address new challenges like the bird flu. Here, research can provide positive inputs. "Research should be ahead of public policy. Unfortunately, research reaches the civil servants late,'' he said. Pankaj Chandra, director, IIM-B , said the CPP has been emerging as an "independent voice'' far away from Delhi where the policies are made.

PPP in water sector:

Earlier in the day, possibilities of public private partnerships in the water sector were in focus. While it was highlighted that the private sector refrained from taking operational risks, delegates from the corporate sector said "external factors' ' like changes in government and water theft could not be handled by them. TNN

Source: http://timesofindia.indiatimes.com