There is a claim that voters are paying tax by default on every purchase and therefore direct tax such as property tax can be ignored. This is fallacious. There is an advantage to direct tax which is empowering and which is why responsible governments as well as voters rely on it.
Insofar as impacting Governance is concerned;
- Indirect taxes load everyone equally and are therefore loaded against poorer sections. Direct taxes can be more equitable
- Direct taxes are openly visible and therefore discipline the Government by way of voters being able to question it on accountability
Now look at what we have done
Only 35% of Delhi’s residents pay property tax. So while some are paying higher taxes, on the average a voter pays about Rs 400 per month towards all municipal taxes in the South Delhi Municipal Corporation. Against this is expected 24×7 Municipal sweeping, free parking, park maintenance and waste management and public lighting, storm water drainage, Municipal Schools, Dispensaries and road seeping. This is the level of sense of freeloading and entitlement. PWD, Military, Paramilitary, Government hospital, Police Infrastructure, cost of elections; Government schools etc are not included in the above assumption.
For a self owned three bedroom DDA SFS flat, at its current value the property tax in London and in New York will be about Rs 3, 90,000 instead of about Rs. 2700 that is paid in Delhi. The extensive unauthorised colonies where more than 50% of Delhi lives as well as lal dora area and urban villages pay no residential property tax.
The AAP Government had, in the last Municipal election promised to waive off property tax altogether. Now almost a third of Delhi’s population would have been excluded from this benefit as the percentage of house-owning households in Delhi is less than the national average(2011 Census), a waiver would only benefit landlords and more so those who have bigger houses
The AAP tried to explain it away by using the indirect tax argument. This is precisely as explained earlier, disempowering for the resident. After all how much will you question if you get a scarce resource like water free, electricity subsidized and property tax waived.
The recent issue of sealing of illegal commercial establishments in Delhi would have had the Central Government give in (at least on the face of it) had the Hon’ble Supreme court not intervened. The number of house owners is many times more than the number of traders. Then why do traders have disproportionate power as compared to residents? The relationship between traders and politicians is one of partners. The Relationship between politicians and voters is one of master and supplicant. The trader pays, and the voter seeks freebies.
The consequences for Delhi are self evident. Year after year of voting for freebies, pitting one party against the other for relaxation in bye laws, and seeking freedom from civic discipline the Delhi voter finds herself locked in a mess of her own making. A situation where no tough solutions can be implemented and no easy solution exists.