Sustainable Financing for Urban Karnataka: Viable Options

The objectives of the current paper are to suggest measures to improve the taxation and tax collection mechanisms in selected cities of Karnataka. We review and reform (where necessary) bases of assessments of revenue streams and suggest enhancement of revenue sources by suitable mechanisms that can be implemented in all the selected cities. Finally, we estimate revenue capacities of the cities and recommend expansion capabilities. The methodology of the study involved visits to each of the selected 12 cities, examination of their audited financial statements, analysis of their major revenue sources and estimation of revenue capacities for each of the cities. We recommended measures to fix relevant policies to improve the system of tax collection and revenue generation mechanisms. Summarizing our findings, increasing revenue compliance from non-paying and unassessed properties and taxation of government properties of a commercial nature, increases the property tax base for all cities across the board. The next step is to increase values of properties, in accordance with market values in an economic sense, in a gradual manner. Water connections must be metered, given that water is a scarce resource, we find its revenue potential to be nearly the same as that from property tax.