The World Bank Board has approved 150 million dollars for the Sindh Property Revenues Enhancement Programme, known as Sindh PREP, in a decision announced on 31 October and reported on 1 November.
The programme aims to improve the collection of urban immovable property tax, known as UIPT, and to improve municipal service delivery in Sindh. By linking property tax collection to services, the programme seeks to create a system in which better collection leads directly to better services for residents, and in which residents can see the benefits of the taxes they pay in their own neighbourhoods.
Sindh PREP benefits Karachi’s 25 local councils and 3.58 million people, according to the details released. Karachi, as Pakistan’s largest city, has a vast number of properties and a large population served by its local councils, and improving property tax collection there has the potential to affect millions of residents. The focus on 25 local councils gives the programme a defined and substantial reach within the city.
One of the programme’s aims is to raise Karachi’s annual UIPT collection to 85 million dollars, while raising compliance from 20 per cent to 50 per cent. Compliance, in this context, refers to the proportion of those liable for the tax who actually pay it. Raising compliance from one in five to one in two would represent a major change, more than doubling the share of payers and providing a much larger and more stable base of revenue for local services.
About 70 per cent of the UIPT collected will be reinvested in municipal infrastructure and services in the participating councils. That reinvestment is a key feature of the programme, because it connects collection to visible improvements. Residents who pay property tax will be able to see the funds used in their own councils, for services and infrastructure that affect their daily lives.
Funding under the programme is linked to results through independent verification, with financing directed towards drainage, sewerage, schools, fire stations, roads and street lighting. Those are among the most basic and important municipal services: drainage and sewerage affect public health and flooding, schools affect education, fire stations affect safety, and roads and street lighting affect movement and security. By financing those areas, the programme targets services that residents notice and rely on every day.
A 40 million dollar Investment Project Financing component extends surveys and administration to 20 councils in other Sindh urban centres, indirectly benefiting about 4.5 million people. That component broadens the programme beyond Karachi. Property surveys are essential for fair and effective property taxation, because they establish which properties exist, where they are and what they are worth, providing the basis for accurate assessment.
World Bank Country Director Bolormaa Amgaabazar was quoted on the importance of cities raising their own revenues. That point captures a central idea behind the programme: cities that can raise their own revenues are better able to fund their own services, rather than depending entirely on transfers from higher levels of government. Own revenues give local councils greater control over their budgets and greater ability to respond to local needs.
Property tax is often seen as a suitable source of local revenue, because properties are fixed in place and benefit directly from local services such as roads, drainage and street lighting. When property tax collection is weak, however, local councils struggle to fund those services, creating a cycle in which poor services and low collection reinforce each other. Sindh PREP aims to break that cycle by improving collection, raising compliance and reinvesting the proceeds in services.
The use of independent verification to link funding to results is also significant. It means that progress must be demonstrated and checked independently, rather than simply claimed, providing accountability for how the programme is implemented and whether it achieves its aims.
For Karachi’s 25 councils and for the 20 other urban councils included in the investment component, the programme offers both resources and a framework for improvement. For the millions of people who will benefit directly or indirectly, the test will be whether collection rises, compliance improves and services visibly improve in their neighbourhoods.
Source: Dawn, Express Tribune, World Bank statement.
