Menacing holding tax  

House owners in the capital are now struck by a menace called holding tax as the two city corporations are desperate in raising tax rates on flats and houses not just exorbitantly but in an irrational manner. The holding tax rate, which was 12 per cent earlier, can now go up to 27 per cent. This will apply to flat and land owners too. Reports quoting sources from the local government division of the ministry of local government confirmed that the income of the two Dhaka city corporations will increase by almost Tk 4.0 billion if the new tax rate is implemented. Dhaka South City Corporation (DSCC) has taken the lead, and this has opened up floodgates for its unscrupulous employees who are making a terrible mess in the name of fixing unreasonable taxes.

Reports have it that holding tax, the main source of revenue of the city corporations, has not been updated/adjusted for long. As a result, a good number of house owners are paying this tax at rates set decades ago. But this is only part of the picture. In fact, houses or flats that were brought under survey and taxes levied five to eight years back that too without any consistency, are now being charged with taxes three to four times higher than the existing rates. True, there is a discrepancy between holding taxes on old houses and those recently built. But what the DNCC employees are up to is a calculated move to raise taxes for both the old and the new ones, ostensibly to cause a fright making the house/flat owners hostage to their schemes. In most cases, any property is being over-valued to the extent that the rates now being set do not conform to any logic. Worst, flats in apartment buildings having varying floor spaces are being levied with the same rate which is totally unacceptable. The only recourse for the property owners is to file an application for review. And unfortunately, it is here corrupt practices are let loose in the name of review.

According to section 20 (3) of the 1986 Tax Law, holding tax is fixed after deducting rent of two months from the total income as maintenance cost and also deducting the annual interest of any loan taken or after deducting 40 per cent of the total rent if the owner is staying in any part of the property. If the decision of the new rates is implemented, a building owner will have to pay 27 per cent as tax. That means, a building owner has now to pay a total of Tk 27,000 as tax if s/he earns Tk 100,000 a year from his/her building. Earlier it was Tk 12,000.

There are indeed questions about the amenities provided by the city corporations to justify any hike. That apart, there is hardly any conformity even in the hiked rates. While manifold raise -- reportedly an unbelievable eleven times in case of property not assessed since 1989-- is a burden on owners, the utter lack of harmony in the rates set for new or nearly-new property has caused an anarchic situation. This, one fears, cannot be resolved unless the city mayors themselves take initiative to rid the house and flat owners of their plight.