Indian Institute of Science Alumni meet

To day I attended the IISc Alumni meet held at "TERI" in Domlur. This venue was the first to be chosen out side the IISc campus. IISc being in the midst of celebrating its Centenary year, this Alumni meet had a greater significance. I attended the meeting as the venue was very near to the place where we live. The organizers were very happy to note that their decision brought the expected result. IISc which undoubtedly is a premium institute of its kind in our country has upgraded its view on its Alumni Association by appointing one of its serving senior faculties to head the association. The break fast was sumptuous with Rava Idli, Masala Dosa, Upma and coffee with Badam Halva to boot. The Quality was that of MTR too.
Professor Dattaguru opened the meet and gave an update on the activities. Ram Akella, Professor and Director, Centre for Knowledge, Information Systems, and Management of Technology, University of California, Silicon Valley Centre, who happened to be visiting Bangalore was very happy to share his thoughts.
The organizers in the year of centenary celebrations had a special invitee to this meet. He was V. Ravichander former member, Bangalore Agenda Task force (BATF).
Mr. Ravichander spoke on BATF which was formed in the SM Krishna days. Those were very difficult days as such, with Veerappan. After Veerappan terrorism has gone to the next dimension keeping in pace with the Internet! SM Krishna a computer savvy Chief Minister Set up BATF. As Ravichander told every CEO takes pride in one up man ship, government too is of no exception. BATF was wound up for good in no time with the change of the government.
With the brief talk which I had with Mr. Ravichander, I got the answer to my doubt as to why it was necessary to change from Self Assessment Scheme (SAS) system of Property tax to that of Capital Value System (CVS):

1. It was BATF according to him who proposed SAS, in line with Income Tax (IT) Assessment, which we file every year. We file our income tax return as per the current IT levied by the government from time to time. There are charted accountants who help us to file our Tax returns as per law. The onus is on the IT department to maximize the revenue for the government by unearthing tax evaders by working hard and honestly. It is a crime to evade taxes. This system of putting the onus on the tax payer to first file the returns as per the requirements avoids the IT department’s indulgence in colluding with the tax payer for personal gains. How this is different for the city corporation when BATF proposed SAS which is nothing different than IT returns Scheme which Citizens are following through out the country? Why should Bangalore Corporation have accepted SAS only for 5 years? Did they require 5 years to do research over and above the self appointed expert committee BATF?
   
2. This clearly shows the fallacy of the law makers, who want the corporation to be on the bargaining side by having the opportunity to collude with the public for obvious reasons.
   
3. At that time when BATF whom the then government had appointed, proposed SAS probably they were in a fix to reject. So it appears they accepted it for 5 years as a law.
   
4. After the 5th year SAS would become illegal automatically!
   
5. The % of honest to not so honest citizens is an astonishing 40:60 ratio
   
6. It requires hard work for the corporation to raise enough money.
   
7. Citizens are not averse to the fact that Government requires more money for Development.
   
8. The use principle, comes in handy for this purpose.

Ravichander also mentioned that traffic optimization was also burning issue addressed by the BATF, apart from other issues like infrastructure. He talked about the Metro rail project and Bus route optimization etc.
After the talk was over all the Alumni were so excited that the time flue without any one noticing other than the organizers.

1. There was an excellent suggestion that bus fares should be subsidized which would provide enough incentive for people to use it instead of using their own transport. There is no point in having too many vehicles and optimize the traffic.
   
2. Develop Satellite towns on the Chennai model etc.

The rain god had to intervene when the meeting abruptly ended.

Property and Other Taxes: The Use Priciple

I was updating my good friend, V Madhava Rao (he is an Engineer, MBA with about 40 years of industrial experience) about the meeting I attended on Property Tax. He started passionately describing the “Use Principle” as the basis for levying taxes. Rao had a totally different and radical view on the subject. Hearing what he was telling, I was dumb struck.The principle is that use of a facility should have a major weight and ownership a minor weight in the quantum of taxation. Since CVS relies only on ownership and a notional or a virtual inflated value for the property, it is unjust and could be often unaffordable. Any taxation should be based on usage, and on realized profits like rental income, and capital gains on disposal of property.Also, Municipal Corporations should look at revenue models beyond property tax like a levy on vehicles using the road, and hotels and other establishments who generate bulk of the garbage. Definitely, the Corporations should have adequate resources but it should come from a multiple set of usage based measures like Motor vehicles using the road. A good measure could be to collect a Cess on petrol, diesel, which would be a direct measure of usage, and also parking fee. Similarly a service tax can be levied on rentals, which the user pays.This concept of Use can be further applied to many other aspects.CVS is an economically inappropriate tax proposal and is disproportionate to economic benefits that the property generates, and hence not viable.