KARACHI: Terming it ‘irrational’ and ‘unjust’, Karachi Mayor Waseem Akhtar on Wednesday asked Sindh Chief Minister Murad Ali Shah to take back his approval given to a recent summary regarding deduction of Rs1.269 billion from the Karachi Metropolitan Corporation’s share in the Octroi and Zila Tax (OZT).

The chief minister approved the recommendation of the provincial finance ministry recently, which said: “An amount of Rs1.269bn will be deducted through 48 monthly instalments [Rs26.454 million per month] from the KMC’s OZT share. The deduction has been initiated since the release of the KMC OZT share for the current month ie February 2017.

“The decision of payment of K-Electric (KE) dues on behalf of KMC is quite irrational as the finance department, Sindh, neither bothered to take opinion from KMC nor the longstanding claim of KMC amounting to Rs7.071bn against K-Electric was even considered,” said Mr Akhtar.

“As stated above,” he added, the KMC had been pursuing the KE for its outstanding dues, but the government of Sindh “arbitrarily decided to pay KE an amount of Rs1.269bn and entailed on KMC monthly deductions of Rs26.454m, which was against all the principles and ethics”.

OZT deduction against electricity bills termed a standard practice

A Sindh government spokesman, however, said deduction from the OZT against electricity bills was a standard practice, which the government had adopted for all the municipalities in the city and the rest of the province.

The city mayor, however, attached a summary of the KMC’s claim against the KE, which showed the KE owing more than Rs7bn to the city’s supreme municipality. Such claims are against the cost of land or land rent, electric poles with one rupee per pole, electric cables with one rupee per metre length and octroi claim regarding import duty or surcharge. More than Rs3bn and Rs3.647bn are owed by KE to the KMC in the heads of fees on electric cables and octroi claim, respectively, said Mr Akhtar.

KMC cash crunch

“The deduction is being made when the KMC is already facing acute financial crises and even there is a shortage of funds in monthly disbursement of salaries to KMC employees,” he said, adding that the Sindh finance ministry had already distributed the KMC’s OZT share among the district municipal corporations [DMCs] ‘without any formula’ and protected the salaries of devolved departments “forcing the KMC to bear the shortfall in salaries of its employees”.

“In the same way,” he added, “on devolution of the Karachi Development Authority [KDA], their salaries were protected by diverting Rs200m per month from the KMC’s grant-in-aid while the requirement of KMC for disbursement of salaries was deliberately neglected”.

Mayor Akhtar said the ‘injustice’ with the KMC was further compounded when the DMCs were given complete protection of their salaries while the KMC was left to meet their [DMCs’] pension payments.

“In addition to that, the shares of major local taxes [advertisement and property taxes] have also been entrusted to DMCs, which was another financial blow to KMC.”

He said the KDA never was the recipient of grant-in-aid or OZT, yet, when the KDA was segregated from the KMC, Rs200m was cut from the KMC’s Rs500m grant-in-aid, “which was a very discriminatory act”.

Mr Akhtar requested the chief minister to withdraw the implementation of the summary, which CM Shah approved in November ‘with immediate effect’.

The mayor also demanded that Mr Shah should preside over a meeting with Mr Akhtar, the local government minister and secretaries for finance and local government to decide “KMC’s rightful share upfront to make the municipal body a functional entity”.

A KMC spokesperson said the mayor’s letter had been sent to the chief minister.

A Sindh government spokesperson said the CM’s secretariat had not yet received the letter. He said the government deducted a small part of the OZT shares of the KMC and other municipalities in the city to pay their power bills and normally that too were reconciled after every six months.

He said the Sindh government paid Rs500m as a special grant to the KMC and it was time for the municipal body to improve its resources with proactive approach.

“Normally, the KMC falls short of achieving its annual tax targets, which should be improved,” the government spokesperson added.

Published in Dawn, March 2nd, 2017