Citing the pressures of the city’s growing population, the Karachi Metropolitan Corporation has asked the provincial government to increase its share in the octroi and zila tax (OZT) to help it meets its increasing expenditures, The News learnt on Saturday.
Presently, the civic body’s OZT share is Rs11.70 billion per year. It has suggested that it should be increased to Rs1.22 billion per month, around Rs14.64 billion per year.
The OZT was abolished by the federal government in 1999 and it was decided that the revenue lost for the district governments would be compensated through the general sales tax (GST) by increasing it from 12.5 percent to 15 percent.
Sindh’s total OZT income in 1999 was Rs6.5 billion per year, of which Rs3.90 billion was given to the city on the basis of “historical share”. According to the formula determined at that time, the KMC and the city’s five district municipal councils shares were fixed at 33 percent and 67 percent respectively.
After the promulgation of the Sindh Local Government Ordinance, 2001, the shares of the defunct City District Government Karachi (CDGK) and the town municipal administrations (TMAs) were revised at 52 percent and 18 percent respectively. Some of the functions of the TMAs were transferred to the KMC or the defunct CDGK.
The provincial government’s budget allocation for the current financial year indicated a GST income of Rs37.47 billion, of which Karachi’s share comes to Rs22.50 billion.
Thus, the shares of the KMC and the 18 TMAs - 52 percent and 48 percent – are Rs11.70 billion and Rs10.80 billion respectively.
However, the KMC contended that it received only Rs3.92 billion from the provincial government, whereas Rs8.61 billion was released to the TMAs.
Salaries and pensions
As the main functions of the district municipal corporations (DMCs) including medical facilities, education and solid waste management etc were transferred to the KMC, the civic body raised this matter before the chief minister to increase its existing Rs326 million per month funds to over Rs827 million to meet its non-development expenditure including the employees’ salaries and pensions.
The provincial chief executive later increased the monthly share of the KMC to over Rs852 million.
Subsequently, the KMC made another request, demanding an increase in its OZT share of KMC from Rs525 million per month to Rs630 million by adding 20 percent on account of salaries and pensions. A summary in this regard was moved to the chief minister and is pending approval. The provincial government has also released Rs500 million as grant to the KMC.
Now, the KMC has sought an increase in its OZT share as according to the civic body, the government had increased the salaries and pensions of the employees by 255 percent since 1999 as against the OZT share, which was increased only by 95 percent during this period.
Thus, the KMC argued that it could not sustain the burden of the increase in salaries and pensions from its own “meagre resources”.
The KMC also wanted its funding share enhanced as the population of the city had increased manifold. It pointed out that when the OZT was abolished in 1999, the population of Karachi was 9.80 million, and had now increased to 18 million.
The civic body has cited the list of institutions and projects, which have put tremendous pressure on its resources. They include the Karachi Institute of Heart Diseases, the Karachi Medical and Dental College, the Trauma Centre in Abbasi Shaheed Hospital, renovation of the Sobhraj Hospital, the Spencer Eye Hospital, improvement of landfill sites, Emergency Response Centres, the Urban Search and Rescue Centre, improvement of fire fighting services, city warden services, Bagh-e-Ibn Qasim, Benazir Shaheed Park, CNG bus services, the Command and Control Centre and the Citizen Complaint Information Centre.
The KMC has also taken up the matter of the Karachi Development Authority (KDA) employees while presenting its case to for an increase in its funding.
It pointed out that the KDA used to pay salaries to its employees using its own resources including the sale of land under various housing schemes.
However, the KDA faced a financial crunch when the Malir Development Authority and the Lyari Development Authority were set up and housing schemes including Scheme 33 were transferred from the defunct KDA to the MDA in 1996.
The KMC said it was bearing a financial burden of Rs245 million per month on account of the KDA’s expenditure until its status was decided.
The KMC complained that until 2008, the provincial government paid the salaries of the KDA employees, but subsequently, it stopped “without assigning any reason”.
The civic body said the salaries of the KDA employees were paid from the KMC’s OZT share, which it maintained, was already too meagre to meet the expenditure of its own employees. The KMC pointed out that the OZT share used to sustain around 70 percent of its non-development expenditure including payment of salaries and pensions.
Sources said that the KMC administrator had raised this matter in a recent meeting with a committee formed by the chief minister to resolve the civic body’s financial issues.
However, the finance department contended that this forum, as per the directions of the chief minister, had been restricted to the extent of giving grants to the KMC and not to discuss the shares of the KMC as per Provincial Financial Commission Award formula.
A source familiar with the development told The News that the KMC was advised to take up this matter before forthcoming Provincial Financial Commission when it would be formed in accordance with the recently enacted Sindh People’s Local Government Act 2012.