Thiruvananthapuram: The Kerala government has decided to review an earlier order regarding a hike in the building tax in municipalities and corporations in the state. Leaders of the ruling alliance fear the existing order could pave the way for a steep hike in tax and such a step right before the assembly elections would be detrimental to the interests of the ruling dispensation.
The order of the principal secretary of the local self-government department called for adding a certain percentage of the fair value of the land to determine the property tax.
The government sources said that the tax hike was not planned and was intended to include land fair value as part of the central government's norms to increase the state's borrowing limit.
The government feels that it is not enough for the local self-government department to issue an order for a tax increase and that amendments are required in the relevant sections of the Municipality Act.
The Centre had informed that in order to meet the financial loss due to Covid-19 pandemic, it would allow an increase in the borrowing limit of the states to 2 per cent of the domestic production. It was also decided to change the norms to strengthen the local bodies in urban areas financially.
The February 12 order included various slabs of tax increase on 16 items based on the fair value of the land on which the houses and commercial premises are located. According to this, the basic property tax on houses will increase by Rs 6 to Rs 14 per square meter.
The basic tax of commercial buildings was increased from Rs 40 to Rs 150 and mobile towers from Rs 500 to Rs 600. The tax would be collected by calculating service tax, library cess and other items.
The order clarified that once the tax rates come into being as per the new norms, there will be an increase of 5 percent every year.
