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How Karachi’s city govt gets money and from where
Municipalities grew poorer after federal government scrapped Octroi
www.samaa.tv
The hidden wealth: How KMC can earn money
KMC could legitimately earn much more than it does
www.samaa.tv
The laws: Tracking the PPP’s slow changes to the system
Sindh government has legislated 20 times on local government since 2010
www.samaa.tv
The choices: PPP, MQM reasoning on local govt
They have chosen local governments that give them more power
www.samaa.tv
The weak spots: Why PPP sidelined the MQM
Karachi’s mayor doesn’t have power but MQM did for a long time
www.samaa.tv
The big question: Which local govt system works for Karachi?
KMC should have the power to raise revenue
www.samaa.tv
The big question: Which local govt system works for Karachi?
KMC should have the power to raise revenue
www.samaa.tv
The laws: Tracking the PPP’s slow changes to the system
Under Musharraf Karachi had 18 towns. The PPP deleted this and said Karachi would have six districts instead. Nazims were out, mayors were in. DCOs and EDOs were out, commissioners were back.
In fact, the Sindh government has legislated 20 times on local government since 2010. Other than amendments, it made new laws. The table gives the laws and highlights the changes made in each one.
| Date of Passing | Title of law | Major changes made |
| 15 Feb 2010 | Sindh Local Govt (Amendment) Act, 2010 | Dissolves Musharraf’s 2001 law, kicks out nazims, says administrators will run the show until elections. Says request ECP in a month |
| 26 March 2010 | Sindh Local Govt (Second Amendment) Act, 2010 | Specifies administrators should be grade 19+ |
| 26 March 2010 | Sindh Local Govt (Third Amendment) Act, 2010 | Specifies elections should be requested in 2.5 months |
| 5 June 2010 | Sindh Local Govt (Fourth Amendment) Act, 2010 | Extends request to ECP to hold elections in 6mths instead, extends to 9mths deadline for elections |
| 28 Sept 2010 | Sindh Local Govt (Fifth Amendment) Act, 2010 | Scraps deadlines and says when the govt feels like holding elections |
| 13 July 2011 | Sindh (Repeal of Sindh Local Govt Ord, 2001 and Revival of Sindh Local Govt Ord, 1979) Act, 2011 | Brings back 1979 system |
| 1 Oct 2012 | Sindh Peoples Local Govt Act, 2012 | Bring back some shape of 2001 system under MQM pressure |
| 21 February 2013 | Sindh (Repeal of Sindh Peoples Local Govt Act, 2012 & Revival of Sindh Local Govt Ord, 1979) Act, 2013 | Brings back 1979 law under rival pressure of nationalists |
| 19 August 2013 | Sindh High Density Development Board (Amendment) Act, 2013 | Sets up a Sindh High Density Development Board |
| 19 August 2013 | Sindh Local Govt Act, 2013 | Brings in the local govt system the PPP likes |
| 19 September 2013 | Lyari Development Authority (Revival & Amending) Act, 2013 | Revives it |
| 19 September 2013 | Malir Development Authority (Revival & Amending) Act, 2013 | Revives it |
| 31 October 2013 | Sindh Local Govt (Amendment) Act, 2013 | Deletes Town & Master Planning, building control powers |
| 7 February 2014 | Sindh Building Control (Amendment) Act, 2014 | Revives 1979 law and adds town planning to it and master plan |
| 10 February 2014 | Sindh Solid Waste Management Board Act, 2014 | Set up a solid waste management board |
| 24 February 2014 | Sindh Environmental Protection Act, 2014 | Sets up an environment protection agency |
| 20 October 2014 | Sindh Local Govt (Amendment) Act, 2014 | Makes election rules clearer |
| 24 February 2015 | Sindh Local Govt (Amendment) Act, 2015 | Changes and details administrative units |
| 8 May 2015 | Sindh Local Govt (Second Amendment) Act, 2015 | Goes into detail on town committees |
| 12 August 2015 | Karachi Water and Sewerage Board (Amendment) Act, 2015 | Amends Karachi Water and Sewerage Board Act,1996, adds punishments |
| 12 August 2015 | Sindh Local Govt (Third Amendment) Act, 2015 | Specifies youth and women in union committees |
| 19 January 2016 | Sindh Local Govt (Amendment) Act, 2016 | Changes secret ballot to show of hands |
| 21 March 2016 | Karachi Development Authority (Revival and Amending) Act, 2016 | Revives 1957 law |
| 26 April 2016 | Sindh Local Govt (Second Amendment) Act, 2016 | Change in election details |
| 27 April 2016 | Sindh Local Govt (Third Amendment) Act, 2016 | Adds supervision instructions and allows municipalities to get big businesses to adopt parks |
| 27 April 2016 | Sindh Local Govt (Fourth Amendment) Act, 2016 | Goes into member details |
| 29 September 2016 | Sindh Mass Transit Authority Act, 2014 | Sets up mass transit authority |
| 6 March 2017 | Sindh Local Govt (Amendment) Act, 2017 | Clarifies vice chairman detail |
| 8 March 2017 | Sindh Food Authority Act, 2016 | Sets up food authority |
| 30 April 2018 | Karachi Development Authority (Sindh Amendment) Act, 2018 | Allows amenity plot conversion for mass transit |
| 7 February 2019 | Sindh Local Govt (Second Amendment) Act, 2019 | Adds secretary, local govt |
The most important changes were to take away master planning of Karachi from the KMC.
In the October change, buried on page 7 is barely one and a half lines that say No. 32 of the previous version of the law is omitted. No. 32 of the 2013 law was about town planning and building control.
The next calculated move was to freshen up the powers of who gets to build what in Karachi. So by 2014, that No. 32 was inserted into a 1979 law on building control, which was renamed and dressed up as the Sindh Building Control (Amendment) Act, 2014. That trick is how over the years, the Sindh government has shuffled around the powers for major institutions that provide services to run Karachi.
Plus, the Sindh government cleverly gave itself the power to take over any city functions it wanted (Section 74).
Another sneaky change was made to push the deadline for informing the ECP to hold local government elections. It went from 30 days to 2.5 months and then six months and then whenever the government felt like it. (I am sure there are perfectly political justifications but no elections were held from 2009 to 2015, so go figure). No wonder the PPP did not hold local government elections and just ran the city on unelected administrators and not elected mayors.
When local government elections were held in 2015, the MQM won, but by this time the PPP had removed so many powers from KMC legally that the mayor was just a figurehead.
On the other hand, the PPP had been giving more powers to the district municipal corporations (West, East, Central, South, Korangi, Malir). They could collect property tax, tolls, taxes on professions, markets, fees on births, marriages, adoptions and feasts, billboards, cinemas and motor vehicles.
Mayor Wasim Akhtar has been extremely vocal about this since he came to office in 2016. His office shared a slab of files with photocopies of all the letters written to the chief minister. Impotent letter after impotent letter pointed out what the mayor’s office believed were its powers that had been taken away. In one particularly piteous one, he said his men were not allowed to collect a fee on cows from Ansoo Goth.
Wasim Akhtar went through a list of taxes and what he could not charge because the power to do so had been given to someone else. He can’t collect a conservancy tax because it is managed by the new waste management board. Drainage tax? The KWSB has it. Fee for slaughtering animals? His response is tart: “Nothing will come from this. Can you run Karachi on a fee to slaughter animals or Karachi Zoo’s entry fee?”
The fee on plot conversions is collected by the Sindh Building Control Authority. What about the fee to set up markets on land owned by KMC? He throws his hands up again. “What, you expect me to run KMC on the rent of one shop when we have a Rs10 million shortage?”
His analogies are bit dramatic. He and other city government bureaucrats have been reduced to idioms like “jharoo dena”. He can’t collect a toll on roads and bridges because that is with the transport department at the Sindh government.
“I just want to tell you that the CM made a statement that we should generate revenue from our own department. So I told him two things. One, the departments that have been given to me, according to SGLA 2013, that are with me, they are not all with me. By notification, you have taken them. Now your point that I should generate revenue. So perhaps the CM can tell me himself which department I can generate revenue from?”
And what is the CM’s response to the mayor’s protests? “He’s the chief executive,” Wasim Akhtar replied. “What does he say…? He’s a finance man.”
Indeed, no one can say that CM Murad Ali Shah doesn’t understand the math. He was Sindh’s finance minister after all, before he became chief minister.
What did the local government minister of the time make of this? Was the Sindh government happy paying KMC salaries? Why had the PPP stripped KMC of its powers?
Saeed Ghani’s response was stark: “They were never a part of KMC.” Building control was never a part of KMC. The Master Plan group of offices were never part of KMC.
The same argument is made for the water board. KWSB is working under the 1996 law, according to which the Sindh government (not the mayor) has the right to appoint the person to run it. That person can be the mayor as well and when Mustafa Kamal was mayor, he did actually run the KWSB briefly. Now they have the local government minister running it.
Ghani says that the mayor never had garbage collection duties. Garbage collection and sweeping was the job of the six DMCs and it was KMC’s job to clean the nallahs. “Despite the financial crunch, the provincial government has given KMC Rs550 million to clean the nullahs,” the CM even said.
Saeed Ghani means, for the PPP, these city government powers were never part of KMC before 2001. Before Musharraf, the Master Plan department was part of the Karachi Development Authority. So the PPP appears to believe that the Musharraf-MQM decade when the CDGK was all powerful was an aberration of sorts—an inflated KMC made possible by a dictator’s favouritism. The real local government is that which was laid out under the 1979 law and brought in a reincarnated shape in 2013.
Ghani admits that what the Sindh government did take away from KMC was local taxes (billboard auctions), schools and health, except certain major hospitals. But he hastens to add: “We have not taken them and kept them with ourselves.” These items are with the six DMCs, which are just as much a part of local government. “This is devolution,” he adds. “You devolve these things.” Out of six DMCs, the MQM has four.
Mayor Wasim Akhtar disagrees that you can call this devolution. He and the MQM see this as centralisation of power and not devolution. He argues that if you take departments and powers away from the KMC and just put them under the provincially managed local government, that is centralisation of power. It just masquerades as devolution to lower tiers of government.
“What devolution? This is not devolution. They’ve taken all the subjects back with themselves,” he says. “They have water, sewage, building control, master plan, transport. How is centralisation devolution?”
A few experts on local government agreed. Dr Niaz Murtaza and Dr Saeed Ahmed Rid, writing in 2017 summed the equation up: Many key things in city government were just “reassigned to the province in the 2013 system”.
Timeline: How local governments have unfolded
1958: Ayub Khan’s military regime with no provincial and national governments
1959: Basic Democracies Order, 1959 creates first rural governments
1960: Municipal Administration Ordinance, 1960, creates urban municipal corporations
1969: System disbanded after collapse of Ayub’s government
1971: Zulfikar Ali Bhutto elected, democracy restored, Basic Democracies deleted.
1973 New constitution makes local government a provincial responsibility, Sindh People’s Local Government Ordinance, 1972 made
1972-1978: No LG elections held
1977: ZAB elected government toppled
1977-1988: Zia-ul-Haq’s military dictatorship. Identical LG laws for four provinces.
1979: Sindh Local Government Ordinance, 1979 enacted and elections held. Abdul Sattar Afghani becomes mayor.
1983: LG elections held. Abdul Sattar Afghani becomes mayor a second time.
1987: LG elections held. Farooq Sattar becomes mayor.
1988-1990: Benazir Bhutto’s first term as PM. No LG elections held.
1990-1993: Nawaz Sharif’s first term as PM. No LG elections held.
1993-1996: BB’s second term as PM. No LG elections held.
1997-1999: Nawaz Sharif’s second term as PM. No LG elections held.
The choices: PPP, MQM reasoning on local govt
The MQM and Musharraf and later on, the PPP, have all chosen which type of local governments they wanted, depending on what gave them more power and financial control. They have been able to do this because Section 140-A of the Constitution on the topic is rather cryptically open-ended.
Just two lines spell out how provincial governments should make local governments. Sindh had to set up a local government system and “devolve” or give power down the ladder. Power had to be filtered down politically, administratively and financially to people chosen in local government elections.
The brevity of this constitutional article has left wide open for interpretation and experimentation what the provincial governments could do with the result that when Musharraf (and the MQM) liked it, they reconfigured the entire KMC/CDGK and when the PPP had more power it changed everything according to what it wanted.
If the 2001 Musharraf local government law for all of Pakistan was so popular, or worked so well, argues former local government minister Saeed Ghani of the PPP, where is it today? When its tenure ran out, no one revived it. In fact, Punjab, Khyber Pakhtunkhwa and Balochistan all dumped it and made their own new laws. He thus argues that this was not just PPP thinking in Sindh. “The day [that law’s] protection was over, all the provincial governments, ended it,” he says.
Saeed Ghani also says that the MQM initially did not like the 2001 Musharraf law but had a change of heart later on. “This very 2001 law they badmouthed and boycotted in 2001,” Ghani says. “Altaf Hussain opposed it in 2001. But it was after 2005 that they decided to stay with it.”
One route that the MQM could have taken was the legal one. If they did not like the laws, they could have challenged them in court. According to Saeed Ghani, they could even propose amendments in the Sindh Assembly.
When I scoff that the PPP would never let those changes see the light of day (well, in my heart at least), he said: “Ok, then the burden would be on us [the PPP] that something good was proposed and we didn’t allow it. At least for the record, they should bring it [to the floor of the house], that they were bringing these fantastic progressive changes to the law.”
When I heard this, and I saw Saeed Ghani’s shug. Well, who stopped them from making changes in the law…
Technically yes, the system does provide for someone to make these maneuvers. And for what it is worth, Mayor Wasim Akhtar filed a petition in the Supreme Court on July 13, 2017. He has gone for Article 140A.
The weak spots: Why PPP sidelined the MQM
Karachi’s mayor may be complaining he doesn’t have power now, but his party sure did have it for a long time. Did they think it would last forever in a province where they had competition from the PPP? The way I interpret it, the MQM had the chance and blew it. It gave the PPP too much ammunition—and I’m not talking Tula Tokarev here.
“Does the MQM have any performance that it says it has done well [that we listen to their demand to] give [them] more things?” asks Saeed Ghani, who I interviewed when he was local government minister. I had asked about the PPP taking powers away from the MQM-strong city government.
Saeed Ghani tries to make an argument. Perhaps it was a good thing Musharraf merged all these bits and pieces into KMC, he says. “But you have to see the consequences of 2001. Have you ever heard of China cutting before 2001? It came after 2001. Then encroachments on parks and playgrounds began after 2005. I am not from the Jamaat-e-Islami and I have a lot of differences with them but this was not during Niamatullah Khan’s time.”
I do not agree with how the PPP and its Sindh government has managed many aspects of Karachi’s institutions but this point I do see. Saeed Ghani is right when he says, “Anyone can do construction and development, if somebody is getting money they can do a lot of things. You can make flyovers, roads, you can do it all. But the destruction of Mustafa Kamal, you can’t undo it.” Whatever was built in Karachi from 2001 to 2010, legal or illegal, cannot be broken down. Thousands of people now live on encroached land. Parks and playgrounds have disappeared under buildings. “What they did it was such a big destruction that can’t be undone.”
“A provincial government also has to see if we give these powers, and someone is demanding it, they should have the vision of what to do with it,” argues Ghani. The PPP is not impressed with the MQM’s track record and doesn’t buy into its vision. So the mayor can say it till kingdom come that he wants control of certain departments, but as far as the PPP is concerned, that ship has sailed.
Another jibe that the PPP takes at the MQM is on the health of the institutions that the MQM was in control of when it was in power. Indeed, when I look back at how the MQM ran Karachi, I find it hard to argue that it was an opportunity, or in the very least their responsibility to have gone around fixing the broken institutions. “Study KDA before 2001, and then after 2001,” says Saeed Ghani. “KDA used to be very good. It was profit-making; it generated funds. It has a lot of money. So if Mustafa Kamal ran it well, it should have become better.”
The problem with this claim is that it needs to be verified. The financial health of the KDA is another can of worms and beyond the scope of this essay. But this jibe only strengthens my belief that performance evaluation is missing overall in Karachi. Public Accounts Committee audits are not the full measure of the way a department is working. One small, perhaps temporary solution, has been the citizen report card. The World Bank once had one on the water supply in Karachi.
We are missing internal monitoring, citizen feedback and checks and balances. For his part, Saeed Ghani says that he started a monitoring mechanism of local government. He has officers who monitor the local councils, check their records and prepare their reports, something that was not happening earlier on. “I discovered a lot of things but they are still coming in,” he said. “At least they should feel that someone is monitoring them. Otherwise they do whatever they please.” If he finds that they are not doing their job properly, the LG minister’s office pulls the plug, freezes their accounts. A commission was activated to deal with cases. If the officers did not show up, they were suspended.
But the same argument holds true for the MQM. It has been arguing that the PPP is not interested in Karachi because it doesn’t have the vote bank here. Here the PPP’s weak flank is exposed that undercuts its decision-making on choice of local government mechanisms and delivery. The monsoon rains, garbage crisis and fly infestation led to an uproar that sewers and garbage were neglected.
The MQM’s line is that the people of Karachi do not vote for the PPP. Persistent cases of alleged corruption have done much to discredit the PPP top-tier in the eyes of those who want to believe that they are corrupt. This allows the MQM to lay it on thick and fast: The PPP is too corrupt to deliver in Sindh, let alone Karachi.
To this, Saeed Ghani says that the proof is in what they are spending on Karachi. “This year the local government’s total development portfolio is Rs35b. Out of this 65% or Rs22.5b is for Karachi,” he said. Eighty percent of the new schemes are for Karachi. It is also spending Rs12.8b in foreign project assistance and Rs3.3b from the district development kitty.
This comes to a total of Rs125b this year. And the CM is asking the World Bank for money to fix the KWSB because that disaster needs Rs100b.
He says that they are expecting the WB to give them Rs235b in five years with an average of Rs47b per year. A lot of that money, Rs22b, is for hospitals in Karachi. “We are spending for Karachi’s people,” he says. “It is a misperception.”
Octroi is a tax on commodities or things to sell that are brought into a town or city. You could call it “municipal customs”. Crudely visualised, it’s like a tax collected when the truck carrying Larkana watermelons enters Karachi at the toll plaza on the Super Highway right outside the city limits. The word emerged in the late 16th century from the French octroyer ‘to grant’, based on medieval Latin auctorizare.
This way of earning money was working out well for Karachi, which is after all, a big business center with lots of products entering its jurisdiction and a population of millions to buy them. In 1999, however, the federal government scrapped the Octroi tax and to make up for this loss of revenue, told KMC that the city government would receive 2.5% of what the Sindh government collected in general sales tax. The GST was at 12.5% and was bumped up to 15%.
Perhaps Islamabad’s big government idea was to change the mechanism and stop the collection of tax from the point where the goods were enteringthe city and start collecting it where the product was sold. So the watermelons were not taxed when they came off the Super Highway from Larkana but instead when you bought one at a fruit shop in Clifton.
Changing the mechanism was most likely motivated by the desire to take financial power away from one level of government and hand it to another. The idea was that the city government would be then given its share. And as we all know, that didn’t turn out so well.
“The problem is huge,” says Khalid sahib. “The municipal governments had Octroi as a good source of revenue. It was taken away and they were not empowered with other resources which could manage the shortfall.”
After this decision, municipalities grew poorer. The federal government said no one else would collect this Octroi. “They gave this money to the Sindh government, not to the entity which lost the source of revenue,” explained Khalid sahib. That entity was KMC.
The Provincial Finance Commission can make decisions about the Octroi but it last met in 1999. (It met in 2007 but nothing was decided). So ‘Octroi’ or their replacement funding levels are stuck. (Just a note, to avert confusion. The Octroi doesn’t exist any more but bureaucrats still use this word when referring to its replacement.)
That was the past, and indeed, a struggle that very much continues into the future. But in addition to the ‘Octroi’ money, Karachi’s city managers have also been getting money from the level above them: the Sindh government. If it is feeling generous and goes by the book, KMC gets its share.
The Sindh government gives all of the province’s 23 districts money to pay for their ‘development’. In Karachi, it has to give money to the KMC and the city’s smaller six district municipal corporations: Central, South, West, East, Korangi, Malir.
The money is divided by a fixed or “historical” formula: 65% of the yearly development money goes to the rest of Sindh and 35% goes to Karachi’s local government (to be split between the KMC and DMCs).
“This is a fixed formula and it has been followed for the last decade,” said a senior bureaucrat. So no surprises there.
Of course, the Sindh government itself has to find the money to give its local governments and dole it out from its budget. This year, 2019, it said it would give everyone Rs30b for development and 16% or Rs2.5b of that would go to KMC. The DMCs would get their own separate shares.
The cash doesn’t always flow interrupted, however. And if the Sindh government itself doesn’t have that money, then the tier below it won’t get the funds either. “Like this year, in 2018-19, the Sindh government didn’t give Karachi Rs2.5b- the last quarterly instalment in share of annual development program (ADP) to KMC,” said the bureaucrat.
That happens because at some level, Sindh doesn’t get its cash from the federal government. KMC’s bureaucrats admit that blockages at the federal government level affect the Sindh government.
“Provincial governments had to rely on federal receipts because the system of revenue is highly centralised,” explains Khalid sahib. “If you look at the total number of receipts of Pakistan, you will see 90% collected by the federal government.”
This is why, in a Sindh budget of Rs1,200b, he thinks about Rs800b is what Sindh expects to take from Islamabad. The province is hardly able to manage on that which is why it is hard-pressed to give money to the municipalities.
When the Sindh government doesn’t give Karachi its development funding, the KMC budget shrinks.
Sindh’s development money was Rs30b last year but this amount dropped to Rs20b this year. What it can give Karachi thus also shrank in proportion from Rs4.8b to Rs3.2b. This is why you see KMC’s budget also go down roughly one billion rupees from Rs27b to Rs26b.
“Instead of Rs5b we got Rs2.5b,” the mayor said. “All our ongoing schemes were not completed.”
The hidden wealth: How KMC can earn money
Some years ago, two city government bureaucrats grew fed up with the tight budgets and started to wonder where they could possibly beef up their cash flows in KMC. One of them spoke off the record about what they discovered.
“Karachi can clearly make money,” he said.
He and the other senior bureaucrat did some math. They hired independent spotters to count how many vehicles could be charged for parking if the rate was Rs5 and Rs25 for motorcycles and cars.
They found that KMC could hypothetically earn up to Rs2.5b a year from charging people for parking across Karachi. But they saw that only Rs200,000 was being collected and deposited in the accounts.
“Anyone who tells you how much revenue they earn is doing hawai firing,” the bureaucrat said, referring to the shoddy guesstimates. They don’t even know how many shops fall in KMC’s jurisdiction that could be, for example, a source of revenue through licenses. If they don’t know this, how can they earn from them?
So ostensibly, he argued, if there were a push to organise data-gathering, KMC could legitimately earn much more than it does.
It isn’t clear why there was no foresight given how dire its financial condition kept growing each year. It is hard to believe that the men in charge of KMC did not see that its revenue was drying up as its powers were being siphoned off.
The last auction KMC held, said the bureaucrat, was for milching animals or cows that supply milk in which it earned Rs100 million. But now the power to auction off market space for milching animals has gone to the DMCs.
KMC used to also earn quite handsomely from rent on BTS mobile phone towers but that has gone to building control. “[We] could earn between Rs10 million to Rs20 million from that a month,” he estimated.
The third revenue stream KMC had was a “betterment tax”. But now the building control authority gathers this tax where there is commercial activity and spends it on places where development works need to be done.
The fourth and perhaps the best way KMC can earn money is through property tax. The mayor was hopeful that the World Bank may persuade the Sindh government to empower KMC to collect it. The mayor’s argument is that if they maintain certain areas in the city, their roads, stormwater drains, greenery, they should have the right to collect property taxes from them.
KMC is also restricted from collecting a land utilisation fee and earning from plot conversions, commercialisation, lease extensions. “Our powers to extend leases has been curtailed,” the mayor had said in an interview with Samaa Digital. “This is Rs2 billion in income.”
The bureaucrat wagered that if they could at least get property tax then their financial problems would end.
Khalid Mahmood Shaikh, who used to advise the city government on finances, wrote in 2014 that he estimated that Karachi’s city government was actually sitting on 500 billion rupees in hidden wealth. An asset management system could solve these problems.
The big question: Which local govt system works for Karachi?
Some years ago, two city government bureaucrats grew fed up with the tight budgets and started to wonder where they could possibly beef up their cash flows in KMC. One of them spoke off the record about what they discovered.
“Karachi can clearly make money,” he said.
He and the other senior bureaucrat did some math. They hired independent spotters to count how many vehicles could be charged for parking if the rate was Rs5 and Rs25 for motorcycles and cars.
They found that KMC could hypothetically earn up to Rs2.5b a year from charging people for parking across Karachi. But they saw that only Rs200,000 was being collected and deposited in the accounts.
“Anyone who tells you how much revenue they earn is doing hawai firing,” the bureaucrat said, referring to the shoddy guesstimates. They don’t even know how many shops fall in KMC’s jurisdiction that could be, for example, a source of revenue through licenses. If they don’t know this, how can they earn from them?
So ostensibly, he argued, if there were a push to organise data-gathering, KMC could legitimately earn much more than it does.
It isn’t clear why there was no foresight given how dire its financial condition kept growing each year. It is hard to believe that the men in charge of KMC did not see that its revenue was drying up as its powers were being siphoned off.
The last auction KMC held, said the bureaucrat, was for milching animals or cows that supply milk in which it earned Rs100 million. But now the power to auction off market space for milching animals has gone to the DMCs.
KMC used to also earn quite handsomely from rent on BTS mobile phone towers but that has gone to building control. “[We] could earn between Rs10 million to Rs20 million from that a month,” he estimated.
The third revenue stream KMC had was a “betterment tax”. But now the building control authority gathers this tax where there is commercial activity and spends it on places where development works need to be done.
The fourth and perhaps the best way KMC can earn money is through property tax. The mayor was hopeful that the World Bank may persuade the Sindh government to empower KMC to collect it. The mayor’s argument is that if they maintain certain areas in the city, their roads, stormwater drains, greenery, they should have the right to collect property taxes from them.
KMC is also restricted from collecting a land utilisation fee and earning from plot conversions, commercialisation, lease extensions. “Our powers to extend leases has been curtailed,” the mayor had said in an interview with Samaa Digital. “This is Rs2 billion in income.”
The bureaucrat wagered that if they could at least get property tax then their financial problems would end.
Khalid Mahmood Shaikh, who used to advise the city government on finances, wrote in 2014 that he estimated that Karachi’s city government was actually sitting on 500 billion rupees in hidden wealth. An asset management system could solve these problems.
The big question: Which local govt system works for Karachi?
What kind of city government do we want for Karachi? If it is a city of 23m people, then surely it needs “special treatment” as a mega city.
The PPP says that if any comparisons need to be drawn on which system is better then the 2013 and 1979 local government laws should be put side by side. So I ask how Saeed Ghani thinks Sindh’s cities should be run and it strikes me that for what it is worth, he does not have much clarity. “We have both experiences,” he says. There is the Musharraf system. There is the PPP’s 2013 system. And that was not much of an answer.
Was the PPP’s sole vision to undo the system that gave the MQM power? Some bureaucrats argue that if a PPP mayor were ever to be elected, we’d see the KMC suddenly becoming more powerful.
Former city financial advisor Khalid Mehmood Shaikh’s radical solution to shut down KMC is hardly an option. He is of the school of thought that says Big Government is winding down in urban management across the world. “The administrative units are getting smaller worldwide,” he says.
While presenting a comparison of local governments across Pakistan at NED University in 2016, researcher Sumrin Kalia said: “Large metropolitan areas have been treated as typical local governments with limited authority.” In Karachi’s case, major metropolitan functions have been kept under provincial control. The result? We just saw them when the rains fell.
The people in power should understand that a metropolitan government like Karachi’s with a large tax base of 23 million people, and exceptionally rich ones too, should have the power to raise revenues (taxes or borrowing like municipal bonds). This is the only way it will be able to run.
But, as far as we can see, this is not the case. And so, we live in an age of Irony. It used to be that the physical ugliness of our world was by far eclipsed by the killings. The rotting streets, the frayed edges of buildings were just a landscape that seemed to be a natural outcome of a high homicide rate, a dystopic reflection. Those of us who could, busied ourselves with buying beautiful things to offset such unaesthetic urban living. But now we don’t even have the killings. All we are left with is a broken city, big government run by even bigger egos and an obscenely wealthy upper crust that for all its money lives in a dump.
The PPP says that if any comparisons need to be drawn on which system is better then the 2013 and 1979 local government laws should be put side by side. So I ask how Saeed Ghani thinks Sindh’s cities should be run and it strikes me that for what it is worth, he does not have much clarity. “We have both experiences,” he says. There is the Musharraf system. There is the PPP’s 2013 system. And that was not much of an answer.
Was the PPP’s sole vision to undo the system that gave the MQM power? Some bureaucrats argue that if a PPP mayor were ever to be elected, we’d see the KMC suddenly becoming more powerful.
Former city financial advisor Khalid Mehmood Shaikh’s radical solution to shut down KMC is hardly an option. He is of the school of thought that says Big Government is winding down in urban management across the world. “The administrative units are getting smaller worldwide,” he says.
While presenting a comparison of local governments across Pakistan at NED University in 2016, researcher Sumrin Kalia said: “Large metropolitan areas have been treated as typical local governments with limited authority.” In Karachi’s case, major metropolitan functions have been kept under provincial control. The result? We just saw them when the rains fell.
The people in power should understand that a metropolitan government like Karachi’s with a large tax base of 23 million people, and exceptionally rich ones too, should have the power to raise revenues (taxes or borrowing like municipal bonds). This is the only way it will be able to run.
But, as far as we can see, this is not the case. And so, we live in an age of Irony. It used to be that the physical ugliness of our world was by far eclipsed by the killings. The rotting streets, the frayed edges of buildings were just a landscape that seemed to be a natural outcome of a high homicide rate, a dystopic reflection. Those of us who could, busied ourselves with buying beautiful things to offset such unaesthetic urban living. But now we don’t even have the killings. All we are left with is a broken city, big government run by even bigger egos and an obscenely wealthy upper crust that for all its money lives in a dump.
