The property tax collected by local governments should be subject to an annual review starting April 1, 2023, the Sixth State Finance Commission has recommended.
The revision should be linked to the monetary value and subject to the condition that it is not less than 5%, indicates the second report of the commission, tabled in the Assembly. Necessary provisions should be made in the laws of Kerala Panchayat Raj and Kerala Municipality in this regard.
The report recommends that all local governments complete the ongoing property tax review by March 31, 2022. Government grants should be withheld for non-compliance, according to the report.
A recurrent tax levied by local authorities on buildings and ancillary land, the property tax constitutes approximately 60% of their own revenue. The commission noted that panchayats, municipalities and businesses can only strengthen their identity as local governments if they raise their own revenues. ”For several reasons, the improvement in rates, both tax and non-tax, has not kept pace with monetary value, resulting in severe revenue losses. This must be rectified once and for all,” he said.
The commission recommended that all houses of 30m² and over should be subject to the property tax net. However, for houses of 30 m² to 50 m², the tax must be collected at half the rates prescribed for other buildings.
The commission also disapproved of the exemptions granted in the tax increases. The exemption of the increase granted to residential buildings up to 2,000 square feet and the limitation of the increase to 25% for residential buildings over 2,000 square feet and 100% for commercial buildings could be removed, indicates the report.
Such exemptions are untenable under the law and unfair to other taxpayers, he noted. In the case of armed forces personnel, the exemption should only be granted to parents and spouses of personnel martyred or maimed in combat or in the line of duty, he said.
The commission also recommended that the Property Tax Board formed in February 2011 be transformed into a Local Government Revenue Board with powers to oversee the collection of taxes by local governments. Reporting directly to the Secretary (LSGD), the council should, among other things, guide local governments in the preparation of rolling revenue improvement plans and oversee their implementation, and help identify new sources of tax and non-tax revenue. for local organizations.