Property tax rates are very low. Yes, I said low I know it is not a popular thing to say, but it’s the truth. In Bangalore, we pay about 0.06 per cent of the value of a residential property in annual taxes, slightly more in some cases. In Seattle, just to pick a random point of comparison, the tax rate is between 0.8 and 1.1 per cent per year. That’s 14 to 19 times higher. Council tax in the UK is in the same range, maybe even higher.
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There’s an old saying that if you pay less (peanuts) you’ll get a lot less too. In some ways that’s what’s happening to our cities.
It is politically difficult to raise any tax, and for that reason all the more important to make sure that tax rates are not allowed to drop too low in the first place. But in any case, since the rates are low now, we have to do something about it.
The usual push-back against higher taxes is that ‘we already get bad service from the BBMP. Nearly everything is bad, so why should I pay more?’, along with ‘more taxes will only lead to more corruption’ or ‘let them first collect the property tax from all properties, which has itself not happened’. These are valid, and real challenges, and I won’t deny that. But at the same time it is true that without a higher infusion of money into the city, there is no way we can expect it to look anything like a developed place.
It will be tempting to say that the State government should foot the bill. I have myself argued in the past that the State should give 6000 crores per year to BBMP, and correspondingly higher money to every other city and village in the state too. But this is just mechanics. Tax money is tax money, whether it’s cycled around from the state, or collected at the council level.
We must confront and overcome the truth, which is that we are under-served because we are under-taxed. Somehow, deep within us, we have to find both the resolve to invest in ourselves and the clarity to understand tell which is the horse (taxation) and which is the cart (development).