Financial crunch forces BBMP to make trade licence mandatory even for small shops

With the BBMP in a debt trap, the municipality is likely to bring petty shops in the city in the tax net today in a bid to fill the widening fiscal gap.

Sources in the BBMP said that out of 4 lakh traders, only 40,000 were licensed. The rest, including small shops, will also now mandatorily need a trade license. This would fetch revenue of Rs 150 crore.

However, it would be a pittance since the debt burden is around Rs 5,600 crore. This includes pending bills for the completed and ongoing civic works and bank loans.
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On August 18 (No budget for the budget), MiD DAY highlighted that the BBMP council is not in a position to present its maiden budget as the exchequer is nearly empty.

The budget is expected to be a whopping Rs 7,000 crore an almost 60 per cent jump from that of last year, which was Rs 4,247 crore.

"The greatest challenge before us is to mobilise resources as the revenue gap is too wide," said PN Sadashiva, chairman, finance and tax committee, who is going to present the maiden budget at noon today.

"We are mainly looking at the property tax, which fetches us an estimated revenue of Rs 1,500 crore."

With no change in the tax rate on the cards, the BBMP has planned to broaden the tax base by bringing more properties into the tax net.

"Out of 16 lakh properties, only 10 lakh are taxable and we are planning to bring the rest into the tax net. This should ease the burden," said a highly placed source. It is still not sufficient to make ends meet as the revenue collected in the form of property tax is only Rs 760 crore, and the fiscal year has only six more months.

"They are showing all unachievable targets, and I can foresee that they will borrow extensively and push the BBMP into the debt trap," said PR Ramesh, former mayor and a Congress leader. "It is a dangerous step and we are moving towards bankruptcy."

Sadashiva admitted that there was no other option but to borrow. "We are looking at au00a0 Housing and Urban Development Corporation Limited (HUDCO) loan, while market borrowing seems inevitable," he added.

Mayor SK Nataraj had said last week that the cash-strapped BBMP was not in a position to prepare a budget, and he was looking at the state government for assistance with a request of Rs 1,500 crore in the form of grant-in-aid, while the chief minister had assuredu00a0 just Rs 500 crore. "We have still not got the funds, but I am sure the chief minister will oblige," said Nataraj.

Meanwhile...

Even as the BBMP reels under debt burden, councillors are demanding
Rs 10 crore each for ward development. With 198 councillors, the cost to the exchequer will be close tou00a0
Rs 2,000 crore. "It's a big challenge, but we must not disappoint the councillors, who are interested in their wards' development. We are doing something in this regard. Just wait and watch," said Sadashiva
Ramesh, however, said, "While MLAs and MPs have their constituency funds, I don't see the necessity of a councillors fund as the development of the wards is covered by constituencies. Looks like it is just a move to swindle the taxpayers."

Waiting for Sakrama

The assembly has passed a bill 'Sakrama' to regularise unauthorised buildings by collecting penalty and it is expected to bring revenue of Rs 750 crore.
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However, Governor H R Bharadwaj has been holding it, seeking clarifications before giving his assent.

"The delay in promulgating the Act is causing confusion among taxpayers and it has hampered revenues," said Nataraj. "I hope the governor will clear the bill soon and our problems will be solved."