Karachi Metropolitan Corporation’s financial crunch would end if the Sindh government gave it one billion rupees in octroi andzila taxes each month, the mayor has said.
The octroi and zila tax used to apply to goods entering a city or zila. Local governments would thus earn revenue from taxing goods entering their cities. But the tax was ended in 1998. The central government decided to compensate for the loss by raising the sales tax from 12.5% to 15%.
Mayor Wasim Akhtar mentioned the tax on Friday while visiting the Sindh High Court Cooperative Housing Society in Ahsanabad, Scheme 33. He said that the total tax collected in the country comes to Rs243 billion out of which Rs200 billion is collected in Karachi.
The cash-strapped city government depends on the Sindh government for much of its funding now. The mayor also said that, despite court orders, the Sindh government has not yet given them money to renovate Empress Market.
He said that the Sindh government has failed to undertake quality development work in the city. Its real problems were potable water and garbage collection, not the construction of flyovers, bridges and underpasses. Akhtar said that the Sindh government has spent Rs8 billion on development works but had not addressed the people’s real problems.
The mayor is not the first one to bring up the octroi and zila tax and his money problems are not new either. The question of where money should be spent on Karachi comes up as the Sindh government undertakes big projects.
In March, the chief minister announced they were building the BRT red line with the Asian Development Bank’s assistance and 847km of roads.The ADB has provided project development assistance worth $9.7 million to improve Karachi’s transport system. An estimated Rs41,200 million will be spent on 19 roads. Separately, the World Bank is giving the Sindh government a loan of $86 million for its Karachi Neighbourhood Improvement Project.