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MCD polls: AAP govt sought increase in house tax in 2016, reveals official letter

As soon as the AAP comes to power in the MCDs, we will abolish the collection of house residential tax and waive all pending dues with immediate effect, Arvind Kejriwal promised on Saturday

Kumar Kundan, New Delhi [ Updated: March 27, 2017 18:37 IST ]
A 2016 letter by Arvind Kejriwal government sought higher
Image Source : PTI A 2016 letter by Arvind Kejriwal government sought higher house tax revenues

Back from a decimating defeat in Goa and Punjab Assembly elections, the Aam Aadmi Party is now desperate to get its grip in Delhi which they have been criticized of neglecting after being elected to power with a resounding majority. The polls to the Municipal Corporation of Delhi are crucial for the party led by Delhi Chief Minister Arvind Kejriwal whose party enters the poll fray against the Bharatiya Janata Party that dominated all three corporations of the civic body in the 2012 MCD elections.

Facing a litmus test of sorts over its two-and-a-half-year tenure in Delhi, the AAP government’s pitch for the civic polls immediately caught the people’s attention. Addressing the media on Saturday, Arvind Kejriwal said the AAP will abolish house tax (residential) if voted into power in the upcoming municipal elections, adding that any pending tax will also be waived off. Going forward, Kejriwal called the house tax structure “draconian” and said that it had become a source of widespread corruption for councillors and officers in the MCDs.

“As soon as the AAP comes to power in the MCDs, we will abolish the collection of house residential tax and waive all pending dues with immediate effect. We are making this promise with full responsibility, and after thorough study and planning. North Delhi Municipal Council had a budget of Rs 3,300 crore, of which Rs 250-300 crore is collected from house tax. Of the total Rs 3,300 crore, Rs 1,000 crore is wasted in corruption, which we will stop if voted to power,” Kejriwal said, clarifying that the relaxation would only be applied to residential house tax and not to commercial and industrial house tax.

The announcement was immediately questioned by experts over its implementation on grounds that the government can only move ahead with its proposal after an amendment is made to the Delhi Municipal Corporation Act of 1957 which can only be done by Parliament. Deputy CM Manish Sisodia, however, shot back saying the government had done its due diligence before making the announcement and that it did not need the Parliament’s nod to go ahead with the proposal.

Several amendments to the Act were made after 1993 without seeking the Parliament’s approval, he asserted and asked people not to believe “rumours spread to mislead them”.

While the jury is still out on the feasibility and implementation of the proposal, a letter by the AAP government in possession of India TV raises some questions on its intent to deliver upon the promise as well as the complete change in stand with respect to the abolition of house tax.

In a letter dated February 4, 2016, addressed to the DDO, Urban Development Department, informing of the approval by the Delhi Lieutenant Governor to the grant of Rs 551 crore loan to the MCD to end the ‘salary crisis’, the Department of Urban Development of the Delhi government stipulates six special conditions for the grant of loan. While the first five “special conditions” deal with other issues, the last is worth noting.

“Increase revenue through improved property tax coverage, bring left out properties under property tax net, increase revenue from advertisement, parking, remunerative projects etc.,” it reads, in clear contradiction to its current stand of abolishing the tax altogether. The proposal, which the Kejriwal government argues is well-thought and arrived at after due diligence, was apparently nowhere in the picture less than a year ago.

One wonders if the BJP’s performance in the recently concluded Assembly elections have pushed it towards such measures.  

The other conditions that the government had set in the letter included stipulating a complete halt on “fresh recruitment, of Group IV employees, i.e., Safai Karamcharis, Beldars and fresh regularization”, discontinuation of “Safai Karamcharies and Beldars engaged on temporary basis in a phased manner within a year” and re-assessment of all existing schemes etc.  

Property tax accounted for a significant share of the Rs 8,351-crore total revenue the corporations collected in 2016. The three civic agencies that govern a city of 20 million plus, earned Rs 1,371 crore — with the south corporation earning the most at Rs 775 crore, and the east getting the least at Rs 192 crore. However, the AAP government has said that most of the collections are prone to corruption which it will remove once it comes to power in MCD.

MCD officials say that civic bodies are already reeling under a cash crunch and implementing such a promise would spell more trouble. In January, around 15,000 sanitation workers in south and east Delhi had called a strike for non-payment of salaries. Such strikes were also held during 2016, raising many a stink in India’s national capital.

“The corporations are already not getting their due from the government on time. If property tax is waived off, where will we get the money to cover our expenses? The decision will cripple the corporations,” said VP Pandey, leader of house, North Delhi Municipal Corporation.

Other parties – Congress and BJP – have also questioned Kejriwal’s proposal saying the leader has a habit of making tall promises and not delivering upon them. “Where is free Wi-Fi, marshals in DTC buses, 5 lakh toilets and other pre-poll promises made by the Aam Aadmi Party in its election manifesto? In the last two years, the AAP government’s performance in every field, including fiscal management, has been dismal,” said Ajay Maken, Delhi Pradesh Congress Committee president.

Delhi BJP spokesperson Harish Khurana also accused Kejriwal of not having adequate knowledge of functioning of municipal corporations.

“This is not the first time Kejriwal is promising things which are not in his hands. Today, he promised that he will abolish property tax from residential properties. But he should know that he cannot abolish housing tax under section 113A of DMC act as it is mandatory,” he said.

Elections to the 272 wards in the three municipal corporations will be held on April 23 and the results will be out on April 26.

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