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The hidden wealth: How KMC can earn money

KMC could legitimately earn much more than it does

SAMAA | and - Posted: Sep 5, 2019 | Last Updated: 2 years ago
Posted: Sep 5, 2019 | Last Updated: 2 years ago

Some years ago, two city government bureaucrats grew fed up with the tight budgets and started to wonder where they could possibly beef up their cash flows in KMC. One of them spoke off the record about what they discovered. 

“Karachi can clearly make money,” he said.

He and the other senior bureaucrat did some math. They hired independent spotters to count how many vehicles could be charged for parking if the rate was Rs5 and Rs25 for motorcycles and cars.

They found that KMC could hypothetically earn up to Rs2.5b a year from charging people for parking across Karachi. But they saw that only Rs200,000 was being collected and deposited in the accounts.

“Anyone who tells you how much revenue they earn is doing hawai firing,” the bureaucrat said, referring to the shoddy guesstimates. They don’t even know how many shops fall in KMC’s jurisdiction that could be, for example, a source of revenue through licenses. If they don’t know this, how can they earn from them?

So ostensibly, he argued, if there were a push to organise data-gathering, KMC could legitimately earn much more than it does.

It isn’t clear why there was no foresight given how dire its financial condition kept growing each year. It is hard to believe that the men in charge of KMC did not see that its revenue was drying up as its powers were being siphoned off.

The last auction KMC held, said the bureaucrat, was for milching animals or cows that supply milk in which it earned Rs100 million. But now the power to auction off market space for milching animals has gone to the DMCs.

KMC used to also earn quite handsomely from rent on BTS mobile phone towers but that has gone to building control. “[We] could earn between Rs10 million to Rs20 million from that a month,” he estimated.

The third revenue stream KMC had was a “betterment tax”. But now the building control authority gathers this tax where there is commercial activity and spends it on places where development works need to be done.

The fourth and perhaps the best way KMC can earn money is through property tax. The mayor was hopeful that the World Bank may persuade the Sindh government to empower KMC to collect it. The mayor’s argument is that if they maintain certain areas in the city, their roads, stormwater drains, greenery, they should have the right to collect property taxes from them.

KMC is also restricted from collecting a land utilisation fee and earning from plot conversions, commercialisation, lease extensions. “Our powers to extend leases has been curtailed,” the mayor had said in an interview with Samaa Digital. “This is Rs2 billion in income.”

The bureaucrat wagered that if they could at least get property tax then their financial problems would end.

Khalid Mahmood Shaikh, who used to advise the city government on finances, wrote in 2014 that he estimated that Karachi’s city government was actually sitting on 500 billion rupees in hidden wealth. An asset management system could solve these problems.

To read the next article of the series on Local Government, click on the image below

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