Open letter to Commissioner GVMC

Srijina Garu
GVMC Commissioner
Visakhapatnam.

Dear Srijina Garu,

Sub: Grievance regarding the change of property tax structure based on the market price of the property

Ref: To the article published Times of India. Link below

http://timesofindia.indiatimes.com/articleshow/83243194.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

On the onset, I am very thankful to have a GVMC commissioner who is open to taking decisions after hearing grievances from the public.

As you are already aware Covid 19 has wrecked a lot of financial and physical toll on people all around India. The commercial tenants all around have invoked Force de Majeure, or substantially reduced the rent or shut shop. In Spite of this, the commercial property taxes had to be paid even when the shops were empty. If you notice there is an alarming rate of vacancy around the city for commercial properties and the majority of the commercial property owners are already delayed in their bank payments. . moving away from brick and mortar to online. There is a study for even businesses that move online 20 physical jobs are lost. With the increase in property tax, the property owners will have no choice but to raise rents which will further push the retail business away. This is the time to help brick and mortar business.

https://www.retaildive.com/news/e-commerce-could-kill-30k-stores-and-half-a-million-jobs-by-2025/570950/
https://libertystreeteconomics.newyorkfed.org/2017/10/how-is-online-shopping-affecting-retail-employment.html

We have a unique situation in India where the rental income is very less compared to THE EMI payable to the bank. Basically, the house owner is paying the bank and subsidizing the rent in the hope to make money on the capital gain. This move to change from the assumed rental to the market price of the property will make rentals expensive and dissuade homeownership.

Also, note that Vizag is home to a lot of retired communities. Who are living in their own home with no income but their pension? This will be a big blow to them. Their home could turn from asset to liability. While paying a percentage of market value as property tax in common in western countries, we have to note the differences

1)USA registration fee - Recording fee - .20%-.50% + Real property transfer tax - 1%-1.425% . In India it is 7.5% for property registration. Much of the cost is incurred upfront in India

2) There is a huge discrepancy in rental incomes by EMI in India and this property hike will cause an increase in rents and make it unaffordable for the common man who is already suffering from job loss and financial uncertainty.

This hike or revision in the property tax structure will have adverse implications in the coming years on retail and homeownership in the city.

The common man is already on life support. This is not the time to break his back
Regards
Uday K Patta