DSCC, DNCC losing huge revenue as holding tax remains unchanged for 33 years

Dhaka South City Corporation (DSCC) and Dhaka North City Corporation (DNCC) have been losing a huge amount of revenue from house rent of city buildings.

Though the law allows DSCC and DNCC to reassess the taxes in five years, the authorities have not been re-assessing the holding tax for the last 33 years.

The house owners are increasing house rent every year but they are paying their holding tax as per the assessment made in 1989.

“The two city corporations have not hiked the tax ever in history but the house rent in the capital has risen nearly 400 percent in the last 25 years,” according to the Consumers Association of Bangladesh (CAB), an organisation working on consumers’ rights.

Compared to others cities, the house rent is much higher in Dhaka but two city corporations of Dhaka also are levying the lowest holding tax on city buildings. DSCC and DNCC levy holding tax of only 12 percent while Chittagong and Rajshahi levy 17 and 27 percent respectively.

As per section 20 of Municipal Taxation Rules, 1986, city corporations of Dhaka levy holding tax on the annual value of buildings, seven percent for building or land, three percent for lighting, and two percent for the conservancy.

Section 21 of the rules said, “A valuation list shall --- unless otherwise ordered by the government—will be prepared in the manner specified in rule 20 once in five years.

Sources said that both the city corporations have taken the initiative to reassess the taxes in 2004, 2016 and 2017 but the landowners vehemently protested it.

In the face of the protest, the Local Government Ministry has issued a notification asking the city corporations not to raise the tax.

Deputy Chief Revenue Officer Md Moniruzzaman Mridha said that they were collecting holding tax but had no control over house rent.

“House owners increase rent every year but we have never increased our holding tax. As per law, we could have re-assessed the tax at least six times in 33 years and earned six time higher amounts from holding tax,” he said.

He also said that they did not know on what basis, the house owners are increasing the rent every year.

Wishing anonymity, a DSCC official said, “When we started re-assessment of holding tax back in 2012, we faced vehement protest of house owners. A house in the Dhanmondi area was rented at Tk 2,000 in 1989 and it is now, rented at Tk 20,000. But we are still taking tax against Tk 2,000. It is illogical. It requires a re-assessment.”

He said they have prepared a rate chart for assessing taxes of newly constructed buildings in 2016 which also needed to be updated.

Adil Mohammed Khan, urban expert and also a professor of urban and regional planning at Jahangirnagar University, said the city corporations can curb the increase house rent by increasing holding tax and the re-assessment of house rent.”

He also said “City mayors are not re-assessing the tax may be from the notion that they may lose popularity among city dwellers. Over the years, the house rent in the city is increasing but not the tax. The city corporation should reassess the rent and levy a reasonable tax on house rent.”

He said that DSCC, DNCC should re-assess the tax for the sake of providing better civic amenities and boosting their income.