Collection of municipal services tax from Karachi stopped

Published November 1, 2021
Karachi Municipal Corporation Building situated at M.A Jinnah Road and a sight of Downtown Karachi. — Photo by Aliraza Khatri/File
Karachi Municipal Corporation Building situated at M.A Jinnah Road and a sight of Downtown Karachi. — Photo by Aliraza Khatri/File

KARACHI: While Administrator Murtaza Wahab says to make the city stand on its feet financially, the Karachi Metropolitan Corporation has not issued bills of the municipal utility charges tax (MUCT), commonly known as municipal services tax, to the citizens for the past four months, it emerged on Sunday.

Confiding this to Dawn, informed sources said that the MUCT bills were issued to consumers quarterly, but no bill were issued during the current financial year that began from July 1, 2021 as the contract of printing and distribution of bills was not so far finalised.

They said that the printing and distribution of MUCT bills were outsourced by the KMC and the printing and distribution contract had expired in May.

However, they said that the KMC’s municipal services department had managed to collect around Rs50million from different banks in the head of MUCT during the past four months.

Rs220m collected in FY21

The sources said that the recovery of MUCT was constantly showing a declining trend as Rs220m was collected during the last financial year ending June 30, 2021, while Rs280m was collected in 2019.

They said that the KMC conducted a survey of over 25 different banks and found that many of them were not in the official data.

At present, KMC uses KWSB data to send quarterly bills to 1.4m consumers

The sources said that the KMC at present relied on the data of 1.45m consumers of the Karachi Water and Sewerage Board, which was not accurate as the number of consumers could be over three million.

Recently, Barrister Murtaza Wahab, who is also the spokesperson of the provincial government as well as CM’s law adviser, had floated the idea of collecting KMC taxes through monthly K-Electric bills.

He had said that barely Rs151.6m was collected in the head of municipal utility tax and claimed that the KMC would get Rs600m per month and Rs7.20 billion per annum from the collection of Rs200 per user through KE bills.

However, Federal Minister for Planning, Development and Special Initiatives Asad Umar had opposed the proposal to collect KMC taxes through electricity bills, saying the federal government would not allow it.

City’s major opposition parties including the Muttahida Qaumi Movement-Pakistan (MQM-P), Pakistan Tehreek-i-Insaf, Jamaat-i-Islami also opposed the plan to collect KMC taxes through electricity bills.

No headway on collection via KE bills

Those opposing the proposal apprehended that the KE would be able to cut the electricity of consumers if they fail to pay KMC taxes imposed by the Sindh government.

The National Electric Power Regulatory Authority has also indicated that it would not allow KE to collect KMC taxes from citizens as it does not fall within the purview of the executive.

The KMC municipal service department had approached Nepra on Sept 16 seeking permission for KE to collect municipal utility bill charges and tax on behalf of the KMC through its monthly electricity bill from Karachi division and to sign a formal memorandum of understanding between KMC and KE.

Chief Minister Syed Murad Ali Shah had also called a meeting on Sept 8 in which the KE chief showed his conditional consent for inclusion of taxes/charges in the electricity bills of KE subject to approval from the ministry of energy and Nepra.

However, sources in the city’s municipal administration said that there was no headway in this regard as no official response was so far received from Nepra on the KMC’s request.

Published in Dawn, November 1st, 2021

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