Loss making Brihanmumbai Electricity Supply and Transport (BEST) will soon submit a proposal to the Brihanmumbai Municipal Corporation (BMC) to add a new section within the property tax that will help them make some money too.
The amount they hope to recover through this tax, imposed on millions of Mumbai’s house owners, will cover a part of their monumental transport deficit losses. BEST currently recovers a paltry amount by including a surcharge on electricity bills sent out to 10 lakh Mumbai residents who receive electric supply from the undertaking. By moving it under the property tax head, they hope to multiply their earnings since property tax is paid by millions of Mumbaiites.
The BEST has been cross-subsidising their profit making electricity division with the loss-making transport wing for years. For the month of May alone, the undertaking’s losses were around R 510 crore after subsidizing. The situation has worsened to such an extent that BEST has applied for a loan of Rs 1250 crore from three banks.
BEST officials say one way to cut losses will be through the property tax route. The undertaking has already received permission to recover transport deficit losses (TDLR) from their 10-lakh odd power consumers residing in the island city.
However, consumers residing between Colaba and Mahim/Sion are angry that they are unnecessarily being taxed, even though many of them do not even use BEST buses.
On Saturday a BEST official said that further decisions will be taken only after discussions within BEST. A proposal would then be sent to the BMC, which is the parent organization for BEST.
“We are thinking of asking the BMC to create a new sub-section within the property tax bracket. We hope to get around one-to-two percent of the tax to cover our transport deficit,” said a BEST official on condition of anonymity.
The BMC currently has a capital value-based property tax system in which property tax is calculated on five factors — price of property, area, age of the building, nature of property and type of construction. Property tax is the BMC’s second largest source of income after octroi collection.
When asked about the proposal for merging the transport deficit (TDLR) of BEST with property tax, OP Gupta, General Manager of BEST said that he wouldn’t want to comment on the matter. At a recent presentation made to the Maharashtra Electricity Regulatory Commission (MERC), Gupta had stated that by year 2015-’16 the TDLR surcharge in electricity bills will become zero.
The BEST currently operates around 4300 buses across Mumbai, Thane, Mira-Bhayander and Navi Mumbai as well.
When contacted power expert Ashok Pendse said, “As long as there is loss from its bus service, the BEST will have to cross-subsidize from some where, be it electricity bills or property tax.”
Vimal Punamiya, senior chartered accountant and taxation expert felt, “the authorities have already doubled property taxes for residential property and three times for commercial property as per the recent ready reckoner rates. Any further hike would lead to trouble. BEST may do better to just increase its bus fares.”
Advocate Vinod Sampat, president, stamp duty and registration payers association agreed when he argued: “The BEST would unnecessarily burden the common man further as they will have to pay more. Instead they should push the government for help.”
Clearly the undertaking’s best laid plans may soon run into rough weather. But if it does get the go ahead from the BMC, Mumbaiites could be in for further taxation.
>> Proposed surcharge suggested within Property tax: 1-2%
>> Transport deficit between 2004-05 to 2008-09: Rs 1200 crore
>> Loan applied for from banks: Rs 1250 crore
>> Loan given by BMC until now: Rs 800 crore
>> Probable revenue from property tax: Rs 30 crore (as per calculation of this year’s property tax collected)
Total properties (Units) in the city:
Flats below 500 sq ft area:
Property tax collected by BMC in 2012-13:
Rs 3,657 crore
Expected property tax in 2013-14:
Rs 3,956 crore
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