Holding tax based on land not rent

Despite objections from homeowners, Chattogram City Corporation (CCC) will start collecting holding tax based on property rent, instead of area. This new method will reportedly raise the tax by many times.

CCC started sending notices to homeowners in this regard on April 23.

Officials of the corporation's revenue department said the previous system could not assess a building's true value, as calculations were done based on estimation mostly. Moreover, there was no specific guideline on how to realise holding tax.

CCC used to collect tax based on the land's square feet (Tk 1 to 5 for per square foot) of a respective building, depending on the locality.

Under the new system, holding tax will be collected based on a building's total rent. The tax will be equivalent to 17 percent of the total rent. As a result, homeowners will have to pay way more tax than before, according to officials and homeowners.

The process to reassess the system started in March 2016 and found 1.85 lakh holdings in the port city. CCC set a target of realising Tk 851 crore as holding tax for fiscal 2017-18, which was Tk 131.91 crore earlier.

In 2017, however, local government ministry suspended tax collection based on the reassessment, due to the movement of homeowners, who say the tax amount is too high, and its impact will fall on tenants.

The ministry withdrew the suspension in January this year. Since then, CCC has been preparing to collect the increased tax.

Omar Faruk, a resident of South Pahartali, used to pay Tk 18,000 as holding tax per year for his four-storey building based on the land itself. But under the new system, he will now have to pay Tk 1.35 lakh.

"We would've been able to pay if it had doubled, but almost 10 times the original amount is beyond our ability," he said.

Kordata Surokkha Parishad, a platform of homeowners, has been staging demonstrations against the reassessment, demanding CCC restore the previous system.

Amir Uddin, general secretary of the parishad, said, "We knew that CCC has initiated the process of collecting holding tax based on the new system." But the reassessment will inflict a huge burden on homeowners.

Contacted, Mohammed Nazrul Islam, chief revenue officer of CCC, told The Daily Star, "We will be collecting holding tax from this July, as per the reassessment and rule for fiscal 2017-18."

"If homeowners deem it to be unjust, they can appeal to the CCC review board. The board will consider the matter, based on homeowners' financial condition," he added.

Mentionable, the main source of CCC's income is municipal tax. CCC can collect 17 percent of the city tax, in both public and private sectors, under the powers granted to it by City Corporation Act-2009.

Within the 17 percent, seven percent is holding tax, three percent electrification tax and seven percent garbage removal tax.