Approaching the one-year mark of its term, and with no elections scheduled until the 2024 Lok Sabha polls, the DMK government in Tamil Nadu initiated a hike in property taxes in local body areas starting April 1. In response, the opposition AIADMK took to the streets in protest across the state, including Chennai and Trichy.
Addressing demonstrators in the state capital, party coordinator O Panneerselvam asserted that the tax increase contradicted the DMK’s electoral promises. He declared an intent to persist in protests until there is a rollback of the tax revision, emphasizing that such policies would compel people to take to the streets.
While proposals for the tax hike, including those suggested in 2013, were delayed or halted by previous administrations fearing public backlash, the MK Stalin-led government proceeded with the move to revive the state’s economy and finances. The official statement justifying the tax increase cited the necessity due to high inflation and a decline in the revenue share of civic bodies.
Tamil Nadu’s revised revenue deficit for 2021-22 was Rs 55,273 crore, a decrease from the previous financial year’s Rs 58,692.68 crore. The latest budget aims to further reduce it to Rs 52,781.17 crore by augmenting tax collection. The recent revision, the first in Chennai Corporation since 1998, is anticipated to generate additional revenue for local bodies, with Chennai Corporation alone expecting an extra Rs 800 crore.
In Chennai’s core areas, residential properties smaller than 600 square feet will face a 50% increase in property tax, while it is 25% for other city corporations and areas added to the Greater Chennai Corporation after 2011. Following this adjustment, a resident of a 600 sq ft home will now pay Rs 1,215 in tax, up from Rs 810. Officials argue that this is still lower than property taxes for similar houses in other cities.
The April 1 order from the municipal administration and water supply department stipulates a 75% hike for houses measuring 600-1,200 square feet, 100% for 1,201 to 1,800 sq ft houses, and up to 150% for houses 1,801 square feet and above. Commercial structures and industries in core Chennai areas also face a 150% increase in tax, while educational institutions will experience about a 100% rise in property tax.
Minister for Municipal Administration KN Nehru defended the decision, stating on April 2 that it aligns with the 15th Finance Commission’s guidelines and is necessary to meet conditions for receiving Central funds. Former Chief Minister Edappadi K Palaniswami warned that the government’s move was just a trailer, sarcastically noting the administration’s failure to provide cash assistance during Pongal and hinting at more challenges for the public in the future.