Daily Times

KARACHI: The Karachi Metropolitan Corporation (KMC) has failed to meet the target set for the recovery of arrears of the Municipality Utility City Tax (MUCT), Daily Times has learnt.

It had to collect Rs 32 billion in arrears from a number of government and private sector entities in July 2016-June 2017 but it managed to collect a meager Rs 267.49 million. This was disclosed by MUCT wing senior director Raza Rizvi.

The arrears recovery campaign also affected the MUCT collection target for the financial year as the local government department was unable to meet Rs1 billion tax collection target.

Former city Nazim Mustafa Kamal had enforced MUCT in 2009. It has since remained a controversial tax. “We are trying our best to evolve a proper mechanism for achieving recovery collection goals, but we have been handcuffed on obvious reasons,” Rizvi maintained.

MUCT arrears are a major reason behind gradual escalation of KMC’s financial crisis. Last year, the deadline for submission of MUCT had been fixed at October 22, 2016, but it was extended further on account of poor recovery performance.

According to MUCT wing 2016-2017 statistics, the monthly target set for July had been Rs 15.174 million; for August Rs 12.84 million; September Rs 6.80 million; October Rs 7.12 million; November Rs 12.07 million; December Rs66.04 million; January Rs 18.60 million; February Rs 33.60 million; March Rs 21.09 million; April Rs 41.8 million; May Rs26.4 million; and June Rs 5.93 million, respectively.

During this period, around 13,000 taxpayers deposited Rs 265 million with the MUCT wing – most of them were private and corporate sector entities.

In the first phase of the tax collection drive, the KMC had initiated action against 13 defaulters, including multinational companies. These defaulters owed Rs 424 million to the local government. Among them was a gas company in the public sector. The company had defaulted on more than Rs51 million and was sealed on October 24, 2016. However, the company took the matter to the court and secured a stay order against the local government.

Earlier, the MUCT wing had secured magisterial powers from the Sindh Law Department in October 2016.

Most of the defaulters belong to South, East and Korangi districts.

Published in Daily Times, July 12^th , 2017.