The Calcutta Municipal Corporation (CMC) is caught in a trap of its own making, after implementation of the waiver of interest scheme, and is suffering from dwindling revenue earnings.
The civic revenue department’s daily collection has dropped from Rs 1 crore to only Rs 15 lakh. Accounts officers feel the drop is an inevitable fallout of the waiver of interest scheme.
The civic authorities used to earn tax revenue of Rs 170 crore a year during the Left Front regime. In 2002-2003, the earnings shot up to over Rs 300 crore.
This sudden jump had not been achieved by the inclusion of hitherto unassessed buildings in the civic tax net, but by sacrificing a chance to earn Rs 360 crore in future, in exchange for an immediate gain of Rs 130 crore.
Of the Rs 130 crore extra, only Rs 35 crore had been gained by taxing unassessed buildings.
There are more than three lakh unassessed or under-assessed buildings in the city.
Mayor Subrata Mukherjee’s waiver of interest scheme was the magic wand that inflated the civic body’s annual revenue earnings in 2002-2003.
Subsequently, a new government enactment allowed disconnection of the filtered water connection to the premises of a property-tax defaulter. This enabled the CMC to maintain the upward trend in revenue collection for some more time after the expiry of the waiver of interest scheme.
Under the time-barred waiver of interest scheme, house-owners who had not paid their property tax to the CMC for long were given an opportunity to pay up their dues by writing off the interest and penalty on the principal amount of their dues.
The civic authorities earned an extra revenue of Rs 130 crore under the scheme.
According to the civic accounts department, prior to the waiver of interest scheme, a certain percentage of the defaulters would regularly pay up their outstanding property tax along with the interest and penalty.
At the prevailing rate of interest charged on the outstanding, the principal amount doubles every 16 years. And in the CMC, there have been no defaulters since 1962.
As most of the defaulters had already paid up their dues by availing themselves of the waiver of interest scheme, the daily revenue earning of the civic body has been restricted to only current demand.