BMC likely to introduce Per-floor tax
The Brihanmumbai Municipal Corporation (BMC) likely to tax builders for every floor. Per-Floor Tax be introduced by the corporation in the coming days.
The Brihanmumbai Municipal Corporation (BMC) may put a cost on the city’s growing skyline. The Shiv Sena has said it wants to tax developers (for every floor) as they attempt to go higher in the space-starved city.
Delivering his budget speech to the standing committee on Tuesday, chairman Rahul Shewale announced that while the developers are making profits from market sales (mostly done on built-up area and not on carpet as mandated by the government), they are regularly flouting construction norms. The BMC as a planning agency is only getting a fraction of the benefits developers are earning.
“Even when the market is fluctuating, developers have the freedom to pass on the burden to buyers. Worse, they are selling flats on built-up area instead of carpet cheating the state government and the buyers.Keeping all this in mind, we are of the view that “A per-floor tax be introduced by the corporation in the coming days,” Shewale said.
The Rs 21,000 cr budget announced for Budget 2011-12 was presented to the standing committee for discussion and final approval. The members of the committee have the power to make changes to it but only to a certain extent. In its budget estimates announced earlier this month, the BMC administration has already declared its intention of introducing taxes and a hike in tariffs in the coming months. But it shied away from announcing them in the budget speech. Then the observers speculated that BMC chief Subodh Kumar did not announce hikes at that time because he wanted the Shiv Sena-BJP to clear the budget in the standing committee and civic house.
BMC administration, Brihanmumbai Municipal Corporation, Budget 2011-12, Builders flouting construction norms, Builders selling flats on built-up area, Builders to Tax for every floor, Mumbai property tax, Per-Floor Tax, Tax for every floor
Misdirected good intentions again?
The efforts by our current CM are definitely well intentioned, but are these efforts to stop granting concessions to builders going to address the underlying problem in the real estate industry in Bombay? Is the underlying problem that builders are asking for too many concessions, or is it that the current Development Control Regulations of Bombay do not address the realities of the city today? Is it the case that most builders in Bombay are corrupt and want to earn free money through concessions, or it is the case that the development control regulations of Bombay are so out of date, archaic and inefficient that these laws incentivise or push builders to ask for these concessions?
What are development control regulations? With an FSI of 1.0 in the suburbs and 1.33 in the city, the amount of supply of real estate in Bombay is very low given the demand. This causes the prices of land to trade at very high values which then results in flats becoming too expensive for most people to buy.
Since affordability of real estate has become a major concern in Bombay today, MHADA has now stopped asking for Premium in its projects and has applied a blanket 2/3 and 1/3 rule that is not financially feasible for most projects where the selling price is less than Rs.8000 to Rs.10,000 per square foot. Does this sound like the well intentioned socialistic policies that were economically and financially defunct that India adopted until the liberalization in 1991? The result of financially and economically defunct policies will be that the free market will bypass these policies by paying large unofficial payments. Instead of this, should we not adopt a policy actually addresses affordable housing that is also financially and economically feasible?
Apart from the FSI, there is no single authority that is responsible for creating the masterplan for Bombay. Is it the MMRDA or UD? Also, MHADA, SRA and MOEF independently set their own development regulations in plots that are in their jurisdiction without adhering to an overall direction or plan for the development of Bombay.
Also, what about CRZ? Why has protecting our mangroves and developing away from the coast become such a contentious issue that most people and the MOEF are adamantly against it? Are we really protecting the coast of Bombay? Please note that prior to the 18th century, there was no Mahalaxmi or Andheri or Mulund…these areas were formed by reclaiming land between seven islands…in effect, the coast was artificially created by the British.
(http://upload.wikimedia.org/wikipedia/commons/thumb/5/51/Seven_Islands_of_Bombay_en.svg/347px-Seven_Islands_of_Bombay_en.svg.png)
Today, if there is a need to increase the density in Bombay to make real estate affordable for most, address slum development, etc., how are we damaging the environment and the mangroves, when that environment was basically artificially created by reclaiming land for the purpose of housing people? If anything, we should reclaim more land to house the millions of people that don’t have homes and then plant more mangroves beyond the new reclaimed land. Please note that I share the same desire to protect the environment as most, but Bombay’s coast is not the same as the coast of Goa or Gujurat or Orissa or Kerala that have biodiversity, ecological and environmental issues to deal with. This is key: it is quintessential to realize that applying CRZ regulations that should apply to Goa, Gujarat, Orissa, Kerala, etc., should NOT apply to Bombay. Bombay should have regulations that take into consideration its OWN realities. What about other world class cities? What about New York, Hong Kong, Shanghai, London, Singapore, Beijing, etc? Given that these cities have successfully addressed their density, public transportation, affordable housing and slum issues, what can we learn from them? Do they restrict FSI close to the waterfront? Do they restrict FSI to 1.0 stating that there is no infrastructure, or do they build infrastructure simultaneously while increasing density? I would recommend those that use infrastructure or the lack thereof, as an argument against increasing density to visit China to see and learn how the Chinese have addressed their urban development issues.
What about the process of obtaining permissions for development? Why does it take 12 months or more to obtain basic permissions, and why are the unofficial payments so abysmally high? Why is the process of obtaining permissions like a labyrinth or an endless maze? Why doesn’t the government increase the wages of its employees so that the demand for unofficial wages is not so ridiculously high? We definitely are a poor country running very large fiscal deficits, and to some extent is it understandable although cannot be condoned.
Hence, what I’ve tried to do is to make aware the fact that despite the lack of clear regulation, haphazard planning or no long term planning, poverty in the country that shows up at the agencies that provide approvals as unofficial payments, illogical and misplaced sense of environmental concern, lack of a single accountable authority, the builders in Bombay still manage to run their businesses. Surprised? Hence, please think twice before knocking down a builder for the sake of populism.
The simple fact of the matter is that unless there is a single agency like a Mayor’s office that is democratically elected that first creates a masterplan or a vision for Bombay for the next three decades, and also has the power to demand accountability from the MCGM, SRA, MHADA, MOEF, UD, etc., Bombay will continue to grow like a local fish market. The planning will look forward for two to three years, the cost of real estate will be abysmally high, the infrastructure will be creaking, the approvals process will be an unending maze and the environmental concerns will be misplaced, and when the builders try to find solutions to his maze by developing their projects in two years, the public, media and the government will continue to throw stones at the builders instead of addressing the underlying issues of a creating a 30 year masterplan that takes into consideration affordable housing, slum development, free market development, sewage, water, public transportation, etc.
In conclusion, instead of throwing stones at builders, we must,
1. Create a vision or a masterplan for Bombay for the next 30 years:
This masterplan must not be created by bureaucrats that do not have any prior experience or training in urban planning, but must be done by seasoned urban planners, public policy specialists, economists, architects, etc. This masterplan must take into consideration free market housing, affordable housing, slum development, water and sewage treatment, public and mass rapid transportation, etc.
2. Create a democratically elected Mayor’s office for Bombay.
This office must be accountable to the citizens of Bombay and must coordinate the efforts of all the independent authorities such as MCGM, SRA, MHADA, MOEF, UD, etc. This office must report and be held accountable for the implementation of the masterplan.
There is no doubt that there have been some builders in the recent past that have gone overboard, but this is not necessarily the rule in Bombay. Also, if it is only the builders, then why do builders in other cities like Bangalore, Hyderabad, Chennai, Delhi, Kolkata do the same as builders from Bombay. Bangalore, Hyderabad and Chennai ALL have new masterplans that have addressed their density issues, affordable housing issues, public transporation issues, etc. Why aren’t we doing so? If we feel that the density of Bombay is too high as is and cannot sustain more people, then we must build more cities like Navi Mumbai in Vasai, Kalyan/Dombivali Panvel, Karjat, etc. We either have to increase density or build new cities or do both or else history and corruption will repeat themselves.