ADB waters down tax demand

KOLKATA: The Asian Development Bank has decided ‘not to insist’ that the Kolkata Municipal Corporation start imposing water tax on domestic households right away.
It has suggested an alternative plan that would enable the civic body to tax the bulk and commercial users first, while streamlining and augmenting the existing sources of revenue.
The decision has come as a much needed relief for the KMC authorities, for mayor Subrata Mukherjee and Trinamul Congress chief Mamata Banerjee have been at odds on the issue.
“We realise that it is politically difficult to impose taxes at this stage when there has been no augmentation of water supply,� head of ADB India’s Urban Unit Alex Jorgensen told TNN on Wednesday. He is on a three-day trip to the city to review the Kolkata Environment Improvement Project — a $250-million venture being funded by the bank.
“We appreciate the mayor’s initiative for trying to press the issue. But politically, it would have been difficult to impose taxes with the elections coming up next year,� Jorgensen said.
He met senior KMC and state government officials to discuss the progress of the environment project. “We have suggested that the KMC first focus on improving its services. They should initially target the bulk users of water and install meters there. This would help to cross-subsidise for the low-end users,� Jorgensen said.
In terms of new taxes, Kolkata residents might expect to see a sewerage tax being charged in about two years’ time. “The first big contract for sewers is to begin in January next year. In two years’ time, we hope for substantial improvement in this sector,� Jorgensen said.
According to him, another strategy that the KMC should adopt is to augment collection of the existing revenues. “The KMC is already working on this and there has been a significant improvement. Revenue collection has gone up by around 20 per cent in the last couple of years, despite there being no new taxes,� Jorgensen said.