All houses in Patna will be under the ambit of holding tax. Picture by Jai Prakash

Patna, June 14: The plans of the civic body to make our city spick-and-span could soon get a shot in the arm. The state government’s decision to introduce a new tax structure for cash-strapped urban local bodies has come as a ray of hope for Patna Municipal Corporation (PMC).

Sources said a revised tax structure is necessary to revive the economic health of PMC, which struggles to undertake development schemes because of funds shortage. The state capital has the potential to generate about Rs 120 crore each year as holding taxes. The actual collection varies between Rs 20 crore and Rs 25 crore. The reasons for the low collection include lack of manpower, irregularities by tax collectors and the reluctance of the property owners to pay the dues.

According to the PMC budget, the expected earnings through holding tax in 2011-2012 fiscal is approximately Rs 66 crore, which includes current and arrear house taxes, water taxes, sewerage taxes, health cess and education cess. The collection, however, is usually less than 50 per cent of the target every year.

The sources in the civic agency said the focus of the officers at the empowered standing committee meeting yesterday was revenue.

“We have urged the state government to hike taxes collected by the PMC, as the tax structure has not been revised since 1991. At the same time, we are asking the administrative and executive wings of the corporation to take stringent action to ensure cent per cent collection of taxes,” said deputy mayor Vinay Kumar Pappu.

Pappu added that all tax collectors of the corporation — there are about 200 of them — have been asked to report at least one holding in their jurisdiction not issued a holding number and hence does not pay the holding tax.

“Collection of holding taxes has improved substantially from the past year. At present, there are two lakh holdings in the corporation area. The same number of holdings is beyond the tax limits because of the corporation’s inaction. Efforts are being made to ensure that all houses within the PMC limits fall under this category and pay taxes on time. Therefore, tax collectors have been asked to be more active and vigilant,” Pappu said.

He added that the tax collectors who do not report about unlisted holdings would have to submit an affidavit stating that there was no such house in their areas. “This will ensure both action and accountability on the part of the tax collectors,” the deputy mayor said.

According to the sources, PMC earns Rs 25 crore in holding taxes, Rs 5 crore in stamp duty and Rs 10 crore through water taxes and other taxes every year.

The sources also said the resource base of PMC was very low and it generated a revenue of barely Rs 40 crore to Rs 45 crore every year. The revenue expenditure had been increasing at the rate of 12 per cent per annum. Total debt liabilities on the PMC are to the tune of Rs 44.5 crore.

Officials in the civic agency said as poor collection of holding or property taxes had been a major challenge, PMC has now decided to make it essential to issue a unique holding number to every new construction.

“This proposal has been approved by the municipal corporation but the state government is yet to decide on it. Once it happens, the policy will be implemented very soon,” said a senior PMC executive officer.