PUNJAB LOCAL GOVERNMENT ACADEMY,

LALMUSA.

Training Manual
for
Punjab Local Government Officials

Annex-III:
Case Study-II (Part 2): Revenue Mobilization and
Action Plan for Municipal Committee Rahim Yar Khan.

January 2022

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Contents
List of Acronyms & Abbreviations: .......................................................................................................... iii
1. Introduction:......................................................................................................................................... 1
2. Revenue mobilization, in Punjab local governments perspective: ............................................. 1
3. UIPT: .................................................................................................................................................... 2
3.1 Options / recommendations for improvement ........................................................................ 2
4. TTIP: Tax on transfer of immovable property: ............................................................................... 3
4.1. Options / recommendations for improvement: ........................................................................ 3
5. Fee for change of land use of a land or building and Fee for approval of building plan,
erection & re-erection: ............................................................................................................................... 4
5.1. Options / recommendations for improvement: ......................................................................... 4
6. User Charges on municipal services (Water Rate, Drainage Rate, Conservancy Rate,
Sanitation Fee and Street-light charges): ............................................................................................... 4
6.1. Options / recommendations for improvement: ......................................................................... 4
7. Tax on Advertisement & billboard: ................................................................................................... 5
7.1. Options / recommendations for improvement: ......................................................................... 5
8. Rent of shops and commercial properties: ..................................................................................... 6
8.1. Options / recommendations for improvement: ........................................................................ 6
9. Parking fee: ......................................................................................................................................... 7
9.1. Options / recommendations for improvement: ........................................................................ 7
10. Toll Tax / Fee on city roads: ............................................................................................................. 7
10.1. Options / recommendations for improvement: ........................................................................ 7
11. Fee for license, permits and sanctions: .......................................................................................... 8
11.1. Options / recommendations for improvement: ...................................................................... 8
12. Improving OSR through increase in rates of taxes, fees, charges, etc. .................................... 8
12.1. Options / recommendations: .................................................................................................... 8
13. Improve OSR through urban regeneration: .................................................................................... 8
13.1. Options / recommendations for improvement: ...................................................................... 8
14. Improving OSR through unlocking the locked resources: ............................................................ 9
15. Improving OSR through efficient and effective tax administration: ............................................. 9
16. Action Plan: ....................................................................................................................................... 10

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List of Acronyms & Abbreviations:
ATM Automated Teller Machine
BoP Bank of Punjab
CCTV Closed-circuit television.
CFMS Computerized Financial Management System
CMDS Configuration Management Data System
COVID CORONAVIRUS disease of 2019
DFID Department for International Development
DRAC District Rent Assessment Committee
Epay Epay Punjab App (electronic mode of payment system
Estamp Punjab Payment Portal for the Cost of Stamp Papers
ET&N Excise, Taxation & Narcotics
Ebill Electronic Mode of Generating a Demand of Tax Payment
FCDO Foreign, Commonwealth & Development Office-Gov.UK
DC Deputy Commissioner
D&C Demand & Collection
E2E End-to-End
GIS Global Information System
GPIS Global Positioning Information System
ID A short form for “identity” or “identification”:
I&S Infrastructure and services
LG Local Government
LG&CD Local Government & Community Development
MC Municipal Committee / Municipal Corporation
MO Municipal Officer
M&R Maintenance and Repair
NDC No Demand Certificate
OPM Oxford Policy Management
OSR Own Source Revenue
PAMRA Pakistan Agricultural Marketing Regulatory Authority
PFC Provincial Finance Commission
P&D Planning & Development
PHA Punjab Horticulture Authority
PITB Punjab Information Technology Board
PLG Punjab Local Government
PLGO Punjab Local Government Ordinance
PKR Pakistan Rupee
PMDFC Punjab Municipal Development Fund Company
PRA Punjab Revenue Authority
PUCAR Punjab Council of the Arts
RYK Rahim Yar Khan
SNG Sub-National Governance
TA Technical Assistance
TPV Third Party Validation
TV Television
TTIP Tax on Transfer of Immovable Property
UIPT Urban Immovable Property Tax

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 Revenue Mobilization and Action Plan- Municipal Committee RYK

1. Introduction:
Rahim Yar Khan (RYK) is the bordering district of the Punjab Province. It is an industrial hub of
the area. As many as 311 major industrial units are operating in District Rahim Yar Khan (source-
Punjab Information Technology Board (PITB)). There are two main sugar mills and three main
fertilizer units located at and adjacent to RYK. There is Shaikh Zayed teaching hospital and
Khawja Ghulam Fareed University of Engineering and Information Technology. Because
of its industrial and commercial character, there is a daily flight from Shaikh Zayed
International airport to Karachi, twice to Lahore and once in a week to /from Islamabad.
2. Rahim Yar Khan (RYK) town is growing rapidly. It is the 17th largest city of the country in
terms of population. As per 2017-census, as many as 420,419 (male: 244,362 and female
176,057) persons were residing in the municipal area of RYK city and the number of households
were 70,900 in that year. Whereas municipal population consisted of 231,000 persons in 1998-
census. It means that there was a net increase of 189,419 persons or 4.31% increase in 19 years
which is 1.31% above the normal population increase of 3% in Pakistan during this period. In
other words, 57,749 persons in 19 years or 3,040 persons each year have migrated permanently
to settle at RYK municipal area. In view of 4.31% growth rate and proposed Site Development
Zone Plan (Annex-7) population of the municipality of RYK could be almost 0.5 million in 2021.
2. Revenue mobilization, in Punjab local governments perspective:
Revenue mobilization in local governments perspective refers to optimum revenue generation
from all the domestic resources devolved to the local governments under the tenth schedule to
the Punjab Local Government Act, 2019. Municipal local governments generate this revenue
through taxation and fee payments on provision of services to the local residents. Revenue
collected by MC RYK from local sources (including urban immovable property tax (UIPT) being
collected by the Excise, Taxation and Narcotic department of the Government) constitute almost
58% of its total receipts (2020-21) and residual 42% income is of government grants mainly in the
shape of provincial finance commission (PFC) share. An upward trend in local revenue collections
have been witnessed during the five years of analysis, although the growth remained slow. The
abrupt decline in expenditure-receipts in 2019-20 statedly was because of COVID-19 pandemic.
The estimated local revenue share is 70% of the expected receipts by the close of FY 2021-22.
But that target of receipts is unlikely to be achieved because of rates increase notified through
gazette notification N0. MC-RYK (MOF) 1102 dated 17-8-2021 could not be implemented
by the MC.
The report on ‘‘Needs assessment’ for improving the OSR identifies the gaps, shortcomings, or
weaknesses MC RYK is confronting in the whole process cycle of revenue generation. This
process consists of three steps: tax imposition (tax increase or increasing the number of taxpayers
through expansion in municipal limits or approving new Site Development Zones within the
municipal area), tax assessment and tax collection.
In Revenue Mobilization Plan, the gaps found in three steps of a revenue head have been clubbed
and mapped with the corresponding possible solutions / measures for the concerned head of
income. These measures could be short -to- medium- and long-term with a road map, as
proposed in the Action Plan.
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 Revenue Mobilization and Action Plan- Municipal Committee RYK

3. UIPT:
Since 1st July, 2014, tax rate is 5% of the assessment made as per yardstick approved by the
Excise, Taxation and Narcotic (ET&N) department of the Government. Following are the caches
in the assessment and collection of the tax:
• formula for calculating the tax involves many steps and is complex to understand
• value of a taxable rented commercial unit, as per yardstick, is 500% more than of a self-
occupied such unit;
• value of a taxable unit on main-road, as per yardstick, is 125% more than of an off-road
unit
• there is a GIS databank of the taxable units but these taxable units are not linked with
GPIS coordinates. Transparency in determining location of a property, for instance
commercial property (which is highly paying tax unit) without link of the property
units through GPIS coordinates is not possible.
• counting a taxable unit in its actual category (rented/ self) and location, recovery
of tax, reconciliation of the payments collected, and recoverable arrears carried
forward each year are main issues surrounding the collection process of the tax;
and
• decreasing trends in UIPT during the years of analysis (-11% in 2018-19 and -9%
in 2019-20) or no increase (in 2020-21), without any change in valuation
assessment yardstick or exemptions during this period, is a matter of concern for
the MC.

3.1 Options / recommendations for improvement:

i. Develop a simple formula for assessment of the tax: Existing mode of assessment of
tax could be replaced and calculated on capital value of the property notified by the District
Collector (DC) of the district under Stamp Act, 1899. The residential, commercial and
industrial plots converted from Site Development Zone (agriculture area but kept open /
unutilized for a period exceeding 5 years, could be taxed.
A. Illustration: Existing formula for a D- category rented taxable commercial unit on main
road:
• Open land 500 (sqyd): 5oox40: 20,000
• Covered area 3000(sft): 3000x40:120,000
• Total: 20,000+120,000: 140,000/
• 10% Allowance (maintenance): 14000/
• Balance value: 140,000-14000: 126000/
• Property tax at the rate of 5%: 126000x5%: Rs 6300/ (per year)

B. Illustration: Proposed formula on existing DC rate for a D- category rented taxable

commercial unit at Satellite Town A&B (main) RYK:
• Covered area 3000(sft): 3000x1650:49,50,000
• 10% Allowance (maintenance): 49,50,000/-10%: 495,000/
• Balance value: 4950,000-495000:44,55000/
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 Revenue Mobilization and Action Plan- Municipal Committee RYK

• Property Tax (proposed at the rate of 0.2%: 4455000x0.2%: Rs 8910/ (per year)
(41% more than the existing tax per year)
• Property Tax (proposed at the rate of 0.1%: 4455,000x0.1%: 4455/ (per year)
(29% less than the existing tax per year)

C. Proposed property tax for open land 20 (marla), at DC rate for a D- category taxable
i. commercial unit at A&B Satellite Town RYK:
Open area rate of 500sqy: 10,00,000x2o: 20,000,000/
Property tax at the rate of 0.05%: 20,000,000x0.05%: Rs 10000/ (per year);
ii. To check occupancy (rented/self), each third similar taxable unit of the same owner in the
province may be considered on rent until proved otherwise on undertaking by the owner
supported with some lawful evidence;
iii. GPIS (geo-positioning information system) coordinates may be adopted for identification,
mapping of location / site of taxable unit (on main/off road);
iv. Third Party Validation (TPV) / random checking by a third party appointed by the LG&CD
department [ for verification of a taxable unit in its actual category (rented/ self),
location, actual recovery of tax, reconciliation of the payments collected,
recoverable and arrears carried forward each year]; and
v. LG&CD department may approach the ET&N department for enquiring reasons of shortfall
in the tax for the last three years 2018-19, 2019-20 and 2020-21.
Proposed formula for calculation of tax on capital value of building as well as open plot, counting
every second property of the same owner on rent, adoption of GPIS to inform location of the
property and TPV of the tax collection practices, all suggest amendments in Punjab Property Act
1958 and Punjab Property Rules, 1958. The proposals are easy to understand and are likely to
bring transparency and generate more revenue depending upon the rate of tax adopted.
4. TTIP: Tax on transfer of immovable property:
• being assessed at the rate of 1% of the ‘consideration’ paid for the transfer of
immovable property since 1st July, 2001.
• MC staff is not conducting reconciliation of their 1% collections with the amounts
paid to Government treasury, each day on each registered deed of sale/
purchase in the town, for cross-checking purpose.

4.1. Options / recommendations for improvement:

i. Tax rate fixed some two decades before, is overdue to be enhanced, at least by 0.5% of
the ‘consideration’, as there is a wide gap between the consideration/ valuation of the
immovable property notified by the DC of a district and market rates which induces the
MC staff for manipulation;
ii. Mode of payment through ‘Epay’ with the help of synergy like PITB may be adopted, for a
uniform method of payment prevalent for ‘E-stamps’ and obviating the corrupt practices;
iii. Tax collected may be reconciled with the amount of tax collected by the Registrar and value
of ‘E-stamps’ paid to Government treasury.

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 Revenue Mobilization and Action Plan- Municipal Committee RYK

The proposals, if approved by the Government, could bring fairness in tax collection process and
likely to improve the existing threshold of income under this head by more than 50% of the receipts
in 2020-21 (PKR 125.13 million) i.e. up to PKR 60 million with at least 10-30% increase each year.
5. Fee for change of land use of a land or building and Fee for approval of
building plan, erection & re-erection:
• A number of commercial buildings has been reportedly constructed without approval.
• About 04 new housing societies and 26 land sub-division cases are pending for want of
approval of the proposed Site Development Zone Plan by the District Planning and Design
Committee after, in principle clearance of the Plan from the Government
• Weak enforcement.

5.1. Options / recommendations for improvement:

i. Approval of Site Development Zones, at the earliest; and
ii. Strict enforcement of building byelaws and penal actions against the non-conforming use of
buildings and plots under Part II of the Eight Schedule to the PLGO, 2021.
The proposed Site Development Zone Plan is likely to work as urban regeneration
The proposals are likely to generate more than PKR 50 million with more than 30% increase each
year (through approval of housing societies and conversion fee of land /building use and approval
of buildings maps for construction of buildings, as the land use is reclassified).
6. User Charges on municipal services (Water Rate, Drainage Rate,
Conservancy Rate, Sanitation Fee and Street-light charges):
• Out of five levies, MC has imposed only two levies i.e. water rate and drainage
rate.
• Current number of consumers / tax payers for residential and commercial/industrial is only
4,593 and 69 respectively which do not appear credible for a population of 420,419
persons and 70,900 number of households in the town.
• Sewer connections outnumber the water connections. The number of households paying
drainage/sewer fee are 41,400 for residential and 700 for commercial / industrial. It means
that a substantial number of domestic consumers have got themselves registered for
sewer /drainage services but not for water supply services.
• MC is providing conservancy, sanitation services and street-lights free-of-charge at 3,789
points.
• Enforcement is weak. Charges in arrears are PKR. 77 million and PKR. 70 million in
water rate and drainage rate respectively.
• MC incurred PKR 187,383 million on M&R of operating charges including
street/lights during 2020-21and has budgeted 256,108 million for current FY on
the M&R of these municipal services.

6.1. Options / recommendations for improvement:

i. Register all the households / commercial / industrial outlets for water connections having
drainage facility, provided the MC has the water supply services coverage over there;

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 Revenue Mobilization and Action Plan- Municipal Committee RYK

ii. Gradually provide the municipal services of drinking water, drainage, conservancy,
sanitation and street-lights on ‘no-profit-no-loss’ basis (Annexure-10 & Annexure 10 A);
iii. Ensure sustainability of quality municipal services to all the residents of the municipal area;
iv. Prohibit informal service providers;
v. Gradually improve its ‘service users’ data by developing a digitized database of residential,
commercial and industrial connections and tags their locations with GPIS coordinates;
vi. Adopt ‘E-pay’ mode of payment, for the ease of users’ and gradually generate E-bills for
those who use E-payment mode by allotting IDs to such service users; and
vii. Make enforcement effective. Recovery of charges in arrears of PKR 77 million and PKR
70 million in water rate and drainage rate respectively may be pursued vigorously
by initiating the proceedings under Part II of Eight Schedule to PLGO, 2021.
Approximation would not be accurate in this case. Keeping in view recovery of Rs 1,019,000 and
Rs1,991,000-collected as water rate and drainage rate respectively in 2020-21, conservative
estimations of an increase of at least 3 times more for water charges (Rs 30 million) would seem
relevant, if the fee is also imposed on 3 services- conservancy, sanitation and street-lights. If MC
gradually moves to provide municipal services on ‘no-profit-no-loss’ basis, the cost recovery could
near the amounts spent on M&R of operating charges (PKR 256 million).
Proposal is likely to generate more than PKR 147 million in arrears and at least PKR 30 million,
with 10% annual increase and growth up to PKR 260 million, if services are provided on ‘no-profit-
no-loss-bases.
7. Tax on Advertisement & billboard:
• No databank of the focus area or sites fixed for advertisement and hoarding of billboards
• No databank of the advertisers
• A sharp declining trend in the collections of the tax during the three years of analysis
• Could not frame Advertisement and billboards byelaws
• Weak enforcement

7.1. Options / recommendations for improvement:

i. Frame Advertisement and billboards byelaws to regulate the tax/fee in pursuance of Apex
Court Judgement dated 17.10. 2018;
ii. No Advertisement Site is allowed on public properties. However, the Apex Court
Judgement allows Advertisements on private properties only when regulated by the
Cantonment Board / PHA (Municipalities, where PHA does not exist as in the case of RYK);
iii. Cantonment Board, Gujranwala, in compliance of the Apex Court Judgement, drafted the
Byelaws wherein, advertisement without license from the Board is unlawful, registration of
advertisers and customers, certificate of fitness of Pylon sign-like erected structures from
a Structure Engineer and full insurance cover for big-size advertisements from an
Insurance Company are mandatory (main provisions of the Byelaws framed in pursuance
of 17-10-2018’s Apex Court Judgement, as a model to be followed are at Annexure -11);
iv. MC may specify categories of different forms of advertisement and billboard, size,
substance and parameters including quality and timeline for each category of
advertisement;
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 Revenue Mobilization and Action Plan- Municipal Committee RYK

v. MC may identify the focus areas/locations /site for each category of advertisement and
issue license allowing Advertisements on such focused areas/sites only;
vi. In the 1st year, MC may provide purposely- printed receipt books to be used by the MC staff
assigned to the contractors/license-holders for tax collection and on the basis of the
particulars/information received through these receipt books, may develop a digital
database software of advertisements and billboards, location-wise, category-wise, and
duration-wise, for future revenue estimation under this head; and
vii. MC may develop e-payment application for tax on Advertisement & billboards for
convenient payment of the tax by the owners / Advertisers of the digitized focus areas/
location/ advertisement.
Proposals, if implemented, can not only regain the income threshold set in 2017-18 i.e. PKR 26
million but are likely to fetch more revenue than PKR 26 million in the 1st year of their
implementation and almost 30% increase each year.
8. Rent of shops and commercial properties:
• MC owns some 1100 shops and two commercial sites of open land
• A reference moved in 2017, for fixing ‘reserve price’ for revision of rent of 1100
shops through auction. is pending undecided with the District Rent Assessment
Committee (DRAC)
• Pending revision of ‘reserve price’, has financial implications of almost PKR 35
million
• As many as 200 cases of rent are under stay orders granted by the courts on
different dates since 2001, 2006 and 2008
• Almost all allotees are occupying the shops for the last many years without getting
their respective agreements revised
• There is a practice of sub-letting. A number of shops, as stated by concerned
employees, have been lent out by the original allottees to persons currently
occupying these shops on huge payment of illegal payment called ‘pagry’

8.1. Options / recommendations for improvement:

i. Make a fresh reference, get market-based ‘rent assessment’, approved from the DRAC
and enter into fresh agreement with the existing allottees of shops for a period of 10 years
under sub-sections (3) & (4) of section 94 of PLGO, 2021;
ii. Make serious efforts to get the stay orders vacated from the courts;
iii. Develop biometric-application and facial reading software for E-bill generation of rent
payment to curb the tendency of subletting, informal buying / selling and ‘pagri system;
iv. Strengthen enforcement and initiate recovery of arrears proceedings as provided in Part
II under Eight Schedule to PLGO, 2021; and
v. Encourage the ’citizen’s voice’ to uncover, below the market rent of shops and sub-letting.
Proposal is likely to generate more than PKR 35 million arrears, enhance existing rent threshold
each month and at least PKR 5 to 10 million increase each year.

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 Revenue Mobilization and Action Plan- Municipal Committee RYK

9. Parking fee:
• Mode of collection of fee is through auction but being collected departmentally
• Contractors in the past, or the MC staff collecting the fee, did not surrender the receipts
books to enable MC to approximate the number of buses, taxis and rikshaws and frequency
of their visits/ stay at the parking lot/s each day
• Slow growth in the fee could be because of lockdown during COVID-19
• Parking stands are not fully equipped with CCTV cameras, security gadgets and modern
facilities
• Street parking is not being regulated

9.1. Options / recommendations for improvement:

i. Frame Parking Fee and Toll Fee Regulations under the PLG Ordinance, 2021;
ii. Up-grade MC owned public transport stands and provide them with sustainable and
modern / basic travelers’ facilities like security gadgets, passengers’ lounges, toilets, TV
screens, prayer’ place, fruit, food and drink points, corners / stalls, ATM machine,
pharmacy outlets, newspapers, etc.;
iii. Determine and enforce minimum standards of quality and price of such each service;
iv. Fix penalty/ies on their poor maintenance or non-provision of passengers’ facilities by the
lessees of designated services / commercial outlets at parking area;
v. Equip the parking/transport stands with parking sheds, emergency workshops, boundary
walls, etc.;
vi. MC may establish its own management set-up to operate these stands or outsource their
operation through public-private partnership mode under a competitive agreement with
those transporters who do not have their own parking sheds;
vii. Install CCTV cameras at entry & exit point and establish E-pay like ‘Easy-paisa’ mode for
payment of fee at each entry point, in case of departmental collection;
viii. Make due publicity of the MC parking area /stands; and
ix. Regulate the off-streets and on-roads parking of public transport vehicles and taxis in
collaboration with business community of the town.
Proposals are likely to generate PKR 5 million to 10 million more than the current lease amount
of PKR 15 million and at least 30% increase each year.
10. Toll Tax / Fee on city roads:
• Toll tax / Fee has so far has not been levied

10.1. Options / recommendations for improvement:

i. Frame common regulations / Byelaws for Parking Fee and Toll Fee under Fifth Schedule
to PLGO, 2021;
ii. Impose the fee under Fifth Schedule to PLGO, 2021;
iii. fix the fee rate on public transport vehicles type-wise, plying on city roads;
iv. ID / municipal tag for each public transport vehicle, utilizing the database of public
transport registered and maintained by ET&N department;

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 Revenue Mobilization and Action Plan- Municipal Committee RYK

v. City public transport plying within city limits may pay the fee through ‘Easy-paisa’ like ‘E-
pay’ mode on daily/monthly basis;
vi. Issue toll fee-free tags for the public transports using MC parking areas on monthly-basis
by adding the toll tax in parking fee (at-least 70% of parking fee); and
vii. Develop a system of Auto-message for payment of toll fee from rikshaw & taxi-drivers.
Proposal is likely to generate PKR 10 million to 12 million and at least 10% increase each year.
11. Fee for license, permits and sanctions:
• Fee for license, permits and sanctions has so far not been levied

11.1. Options / recommendations for improvement:

i. Frame Byelaws for issuance of licenses, permits and sanctions;
ii. Impose the fee on granting license, permits and sanctions for holding private markets,
slaughterhouses, temporary stalls, shows, fairs, exhibition, dramas, theatres, recreational
parks, private latrines, registration of private water supplies, registration of keeping
pet/dogs etc.;
iii. Develop digital database for the license, sanction and permit holders;
iv. Payment of fee at the time of grant of licenses, sanctions and permits;
v. An incentive of rebate for paying the fee up to a period of 2-3 years, in one go; and
vi. Automated message for expiry / renewal of licenses, sanctions and permits.
Proposal is likely to generate PKR 1.7 million to 2.0 million and at least 10% increase each year.
12. Improving OSR through increase in rates of taxes, fees, charges, etc.
• MC got rates of OSR heads revised for the current FY 2021-2022 through gazette
notification N0. MC-RYK (MOF) 1102 dated 17-8-2021
• Stopped its implementation without withdrawal of the said notification
• Impact of the increase is estimated to more than PKR 400-450 million of the
income received during FY 2020-21, in FY 2021-22 budget estimates.

12.1. Options / recommendations:

MC may implement the notified rates of tax/fees with immediate effect (where tax-collection is
through office) and all other taxes being collected through lease w.e.f. FY 2022-23, instead of
their suspension.
Financial impact of the increase on OSR heads (minus UIPT, TTIP) would be at least PKR 400-
450 million (Table 3 of the report)
13. Improve OSR through urban regeneration:
• Municipal limits were fixed on 10th March, 1986
• Residents residing adjacent to municipal limits have no legal access to municipal services
• Unplanned and ribbon development in adjacent areas posing threat to municipal services
and environment

13.1. Options / recommendations for improvement:

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 Revenue Mobilization and Action Plan- Municipal Committee RYK

i. Expand municipal limits in consultation with ET&N department;

ii. Improve OSR through urban regeneration (extend taxes to new municipal area including
UIPT, Commercialization and Building Application Fee, Advertisement Tax); and
iii. Extend municipal services and infrastructure in newly extended municipal area.
Proposal is likely to generate millions each year with reciprocal cost on extended municipal
services and infrastructure.
14. Improving OSR through unlocking the locked resources:
MC is owed almost PKR 191 million in arrears under the following heads of accounts mentioned
against each. MC may start immediate necessary proceedings for their recovery, under Part-II of
Eight Schedule to PLGO, 2021, as detailed in Table 01 below:
Table 1: List of Arears

Sr.# Recovery Head PKR in Million Remarks

1 Rent of shops 35.00 (already mentioned under relevant head)

2 Water rate 77.00 -do-

3 Drainage Rate 70.00 -do-

4 Contractors 7.90 -

5 Amount involved 0.7 -

in audit paras

15. Improving OSR through efficient and effective tax administration:

A. MC needs more efficient and effective tax administration and to take immediate
disciplinary action against its office staff on complaints or otherwise, by considering the
following as gross misconduct:
• intentionally omitting a taxpayer to pay the tax
• incidence of connivance of any sort for tax evasion
• not raising the tax demand timely
• not recovering the tax in time
• not pursuing the demand for recovery through courts etc.
• overcharging the taxpayers
• leakage or defalcation in collection of public revenue
B. MOs (Finance, Planning, Regulations and I&S) responsible for tax collection efforts
and holding additional charge of their respective posts in the MC or additional charge of
such posts in some other local governments. One-post-one-person, principle needs to
be followed and additional charge arrangement needs to be discontinued.
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 Revenue Mobilization and Action Plan- Municipal Committee RYK

C. As many as 161 posts are vacant in tax collecting offices. Some job-criteria / requirements
needs to be worked out and justified vacancies need to be filled immediately.

16. Action Plan:

MC RYK faces a resource gap up to 70% or more, impacting its municipal service delivery.
Bridging the tax gap and increasing service delivery is only possible when MC is disciplined in tax
collecting efforts and strict in enforcement and regulation.
There is no quick-fix for improving the OSR of a local government. Most of the measures for local
tax recovery are long-term as they attract local resistance and eventually litigation. Tax reforms
take considerable time for the stake-holders to reach an agreement on policies and legislative
changes.
Short-term measures are starting points for long-term objectives. Taking account of the gaps
and weaknesses identified in ‘Need Assessment report’, measures categorized as short-term in
Action Plan discuss the steps that could be taken in the short term but can expand upon in the
medium-to-longer term.
Short-term to medium and long-term measures have been suggested to be taken, ideally, within
a period of six months each but not exceeding over a span of 24 months.
For close coordination and better decision, Executive Committee of the MC (constituted under
rule of the PLG (Conduct of Business) Rules, 2016 headed by Chief Officer) is advised to
monitor the whole reform process and District Reform Working Group (DRWG) may provide
administrative support where the process is stuck up.
Proposed short- term, medium term and long-term measures are detailed below:
Proposed Action by MC Responsibility Financial Minimum Benchmark
Measures Implication
(PKR in Million)

SHORT-TERM MEASURES:

Resource Hold Executive DRWG No extra cost Meeting is held and Plan is
Mobilization Committee approved within 10 days of
Plan is meeting and a the submission of the plan
approved and workshop of
shared with senior employees
stakeholders to sensitize about
the plan
Approval of Follow-up of the DP&D 50 Approval granted & fee for
Site reference already Committee approval of housing
Development initiated societies and land sub-
Zones divisions received by 30th
June, 2022

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 Revenue Mobilization and Action Plan- Municipal Committee RYK

Proposed Action by MC Responsibility Financial Minimum Benchmark

Measures Implication
(PKR in Million)

Implementation Obtains approval Council/ 150 New rates are either

of new rates and start Administrator implemented or de-notified.
notified in implementation
8/2021(where
collection of
tax/fee is
through staff)
Rent Make a fresh case DC/DRAC 35 DRAC may re-assess the
assessment by for market-based rent of shops/building in
DRAC rent assessment terms of section 94 (3-4) of
by DRAC PLGO 2021
Shifting to E- Coordinate with Administrator. / Cost may be Epay mode of payment is
pay System BoP for necessary BoP borne by adopted by MC by June,
arrangement back-end- 2023
bank
MEDIUM-TERM MEASURES:

Follow-up of Review status and Executive No extra cost Check latest status of the
the short-term initiate appropriate Committee / references, hold review
measures actions Council/ meetings / reminders / etc.
Administrator and continued follow-up in
1st week of July, 2022
Hiring HR Develop some Council/ Existing All justified vacancies are
yardstick of HR Administrator budget filled by MC by 30th June,
requirements and LG&CD 2022
department

Follow one- Initiate a reference -do- Existing Additional charge

person-one-job to the LG&CD budget assignments are
principle department for discontinued by MC by 31st
review of Dec, 2022
additional-charge
practice
Imposition of Frame Council / 150-200 Imposition of fees
fees entrusted Regulations, fix Administrator (entertainment fee, fee for
to MC rates through
compounding of offence, fee
gazette
notification for licences, fee for
establishment of private
markets, toll fee, fee on sale
of cattle, street lights
charges and sanitation fee)
by 31st July, 2022

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 Revenue Mobilization and Action Plan- Municipal Committee RYK

Proposed Action by MC Responsibility Financial Minimum Benchmark

Measures Implication
(PKR in Million)

Upgrading Frame regulations -do- Depends on MC may install Radio

Parking stands Workout / decide the type and Frequency Identification
mode of fee volume of Device (RFID) system for
collection and inputs improving the fee collection
upgradation of the of general bus stands by
stands 31st July, 2022.
Recovery of (Regulation Wing) Council/ 191 LG&CDD to approach the
arrears Initiate recovery Administrator / honorable Lahore High
proceedings under Summary Courts Court Lahore for nomination
Part II of Eight of a trial court to act as
Schedule, PLGO, summary court in the district
2021 for disposal of the cases
involving municipal offences
and revenue in arears by
30th June, 2022
Develop Provide necessary Council / Negotiated LG&CDD may develop a
databank data / particulars Administrator/ cost fully computerized data
software of MC of users & sites LG&CD / PITB bank software of MC service
services-users users by 3oth Jun 2023
&
advertisement
sites
Improving Undertake Council/ Existing Ensure ‘no disruption’ in
sustainability of necessary works Administrator budget municipal services through
municipal and purchases existing resources by 31st
services December, 2022
Sustainable Make necessary Council/ Additional MC may provide sustainable
quality arrangement Administrator resources quality municipal services to
municipal the existing as well as
services to the projected residents/ fee
existing payers
population and
built-in area /
projected
population and
built-in area
LONG-TERM MEASURES:
Follow-up of Review status and Executive No extra cost Review meetings /
the short-term take appropriate Committee/ reminders / etc. and
and medium- actions Council/ continued follow-up
term measures Administrator
GPIS -do- Council / Negotiable Govt. may adopt GPIS
coordinates Administrator coordinates for identification
adopted and Government of taxable units.

12
 Revenue Mobilization and Action Plan- Municipal Committee RYK

Proposed Action by MC Responsibility Financial Minimum Benchmark

Measures Implication
(PKR in Million)

Expansion of Undertake Councils / Expansion LG&CDD may take

municipal limits necessary Administrator / will accrue necessary steps to expand
homework / LG&CD both benefits the municipal limits by 31st
surveys in department and cost December 2023
coordination with
district ET&N
office for joint
efforts
Providing Prepare estimates Council/ Substantial Provide maximum cover of
municipal / execute new Administrator cost services to residents
services projects residing in newly extended
through new municipal area. Additional
infrastructure / resources (accrue from
procurement in identified additional
the extended resources and enforcement)
area are spent on development
projects depending upon the
newly extended area in MC
limits by 31st December,
2023.
Increase in Follow the Council/ 60-70 i. Prior approval of increased
TTIP rates at reference made at Administrator / rate is obtained from the
the rate of the start of the Government Government and new rates
0.5% Pilot are notified
ii. Instructions for
reconciliation of TTIP with
Stamp duty are issued by
31st December, 2023
Shifting to Follow the Council/ Financial Approval of new formula,
proposed reference made at Administrator/ impact Third Party Valuation (TPV)
assessment the start of the Government / depends & GPIS is finalized by 31st
criteria and Pilot Legislation upon the December, 2023
calculation of criteria
property tax at approved
Capital value
of building and
open land

13