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Residential parking fee is not a burden to car owners

Recently, the Bruhath Bangalore Mahanagara Palike (BBMP) has decided to charge for the parking fee in residential areas of Bengaluru, from car owners through issue of annual permits. The fee of the annual permit varies from Rs 1,000 for small cars, Rs 4,000 for medium cars to Rs 5,000 for MUVs/SUVs. Before analysis of residential car parking fee, it is crucial to appreciate the extent of revenue generation from urban properties.

India collects only 0.2% of GDP as property tax, while OECD collects 1.08%, UK 3.11%, USA 2.47% of GDP as property tax. India’s urban property tax forms just 1/6th of OECD’s. And that speaks of the vast differences in urban amenities. On an average, as only around 50% of the urban properties are taxed to around only 50% of their potential, an immense potential exists to generate tax revenues through property valuation based on vintage, square footage, furnishing, use of GIS and by scrapping of different types of tax exemptions. The extent of property tax exemption is 10 percent of assessed properties in India and varies from 40% in Bengaluru to 60 percent in Delhi.

According to 2016-17 Economic Survey of Govt of India, Bengaluru and Jaipur are collecting a modest 5 to 20% of their property tax potential of 2016-17. Therefore, by widening the tax base and increasing rate of taxation, urban areas have immense potential to contribute to their welfare. The property tax revenue per capita per year varies from Rs. 2676 in Pune, Rs. 2053 in Bengaluru, Rs. 1121 in Mumbai, Rs. 182 in Chandigarh, to Rs 7 in Jaipur (2015-16). The property tax revenue as percentage of own tax revenue ranges from 75% in Patna, 62% in Bengaluru, 44% in Pune, 12% in Chandigarh, 8% in Mumbai, 1% in Jaipur.

Thus, the proposed residential car parking fee permit in Bengaluru which ranges from Rs. 2.75 to Rs. 13.70 on per day basis, is meagre. A residential owner can get permit for only one vehicle. The permit will be issued as long as parking does not disturb the movement of emergency vehicles. Even then, the permit does not “guarantee” a free spot but only authorises the holder to park his/her vehicle as long as he or she is a resident of the road and can prove that he/she lives in a building that doesn’t violate approved plans and zonal regulations.

Considering the cost of new car to range from Rs. 5 lakhs to Rs. 15 lakhs, the annual depreciation assuming 10 years of life, ranges from Rs. 137 to Rs. 410 per day. The parking fee of Rs. 2.75 to Rs. 13.7 per day forms only 2 to 3.3 percent of depreciation.

Considering the cost of private parking space at around Rs. 36000 to Rs. 60000 per year, the parking fee works to around Rs. 100 to Rs. 165 per day. Compared to this, the cost of residential car parking permit fee of Rs. 2.75 to Rs. 13.70 per day is a miniscule forming 2.75 % to 8.3% of the private parking fee and forming 2 to 3.33% of annual depreciation.

Therefore the parking fee permit to be imposed by BBMP is a miniscule and car owners can jolly well pay this fee if this can provide them assured space in front of their home as first preference or at least in their street as second preference. This concept will provide additional revenue for the urban areas in general and BBMP in particular for welfare.

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Views expressed above are the author’s own.



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