Team Leader, Urban Management Specialist for the Bangladesh
Central Municipal Support Unit, Dhaka
Email: [email protected]
E-Governance can be initiated through technology but it can be sustained only through E-babus.
Municipal institutions are ultimately responsible for basic urban services. In most developing countries these services need urgent improvement, but administrative capacity is inadequate. This presents a challenge: how can administration and basic service provision be restored or upgraded at the same time? A successful formula for successfully meeting this challenge was developed in Mirzapur, using modern computer and management techniques. These techniques established only the foundation for developing E-Governance, but implementation required achievements that would restore public confidence. A brief summary of the key achievements is given here:
- First municipal Geographic Information System (GIS) in India
- 44 percent increase in properties listed for municipal tax
- First systematic property valuation in over 35 years
- 7 times increase in property assessment
- Tax bills issued and corrected after 17 years
- Tax collection almost tripled in 4 years
- Top performing municipality in the state of 170 million
- All municipal tax records computerised
- All property and infrastructure maps prepared and computerised
- Garbage piles removed and replaced with landscaping
- Secondary solid waste collection eliminated for entire city
- All water connection records computerised and linked to GIS
- Water bills issued for first time in memory
- Development of 3-year programme to achieve financial solvency (balanced current accounts and reduction of arrears)
- Successful implementation of 20-30 percent community financial contribution for small infrastructure improvement with over 10 percent of city population
- For the first time in memory staff salaries paid in the current month.
Fig.2: Community awareness programme for garbage disposal
These are only the most quantifiable achievements. The real success of the project is in changing the direction of the overall civic culture where the municipality had almost stopped functioning. How bad were the conditions and how difficult the problems in Mirzapur at the start of the project?
Legislation devolving self-government powers to municipalities was enacted by the Indian state of Uttar Pradesh in 1994. This required municipalities to assume responsibility for providing a basic level of urban services. Municipalities would have to generate most of the revenues needed to restore urban services, which had gradually broken down. The 200,000 population city of Mirzapur in Eastern Uttar Pradesh was chosen as a test case for developing a strategy to address these fundamental changes in municipal administration.
Neither administrative officers nor elected city councils had initiated any substantial tax increases for nearly 35 years. The civic environment was not encouraging for the future of the city.
Laws and regulations were in place and senior civil servants agreed on principles of good government, but in the end people just didn’t do their jobs. In the early project stage there was no active interest in the local community to improve anything. In order to achieve broad government objectives the project had to be an advocate for better civic conditions. Pushing improvements such as good governance, let alone E-Governance, would have been resented and resisted. The only hope for success was to persuade and introduce the feasible improvements to the institution, which have given the community a fighting chance to adapt to modern conditions and make a success of self-government. By 1995 increased establishment costs and broken infrastructure forced the municipality to consider ways to increase revenues dramatically. However, records were inaccurate, out of date, difficult to manage and often not even available.
Once property tax records were computerised it became clear that stock solutions to inadequate revenues such as collection drives were not realistic. Computerised billing tripled tax collection in 4 years, but since the base was 35 years old revenues were still far too low. Correcting and updating the property valuations were unavoidable in order to increase municipal revenues to a level equal with basic expenses. This was achieved under the existing administrative procedures through a complete property survey and valuation analysis. This also produced the first ever property tax maps for the entire city.
The proposed property tax increase of about 7 times would only be adequate to restore basic services over a number of years. After many months the city council members came to realise this. Investment in new and costly infrastructure instead of basic repair and rehabilitation would quickly exhaust the limited municipal funds and not achieve any significant system service improvement. As a result, it was necessary to determine the costs of the most basic repairs through pilot investments. Then maps and infrastructure inventories were developed to identify and implement the most critical repairs in an urban services restoration program. The first Municipal Geographic Information System in India made it possible to prepare a citywide investment programme. Project funds were only sufficient to complete part of this long-term effort, the most visible of which are the street drain repair programme and the city wide solid waste collection programme.
In Mirzapur over 10 percent of the city residents contributed upto 30 percent of the cash cost of these improvements. This genuine involvement by the public is developing into active support for future service improvements.
There are no easy ways to achieve success in improving governance. However, there are approaches and techniques that can achieve positive results. Some of these have been gathered together in the Mirzapur Model approach. The project was recognised by the United Nations as a Good and Best Practice in 2000 and was nominated by the Government of India for the Habitat Scroll of Honor and the Dubai Habitat Awards. Recently, it was also nominated for the Stockholm Challenge (information technology) Award. The Mirzapur experience is also one of the subjects of the documentary “Water: The Drop of Life,” prepared for the Second World Water Forum at the Hague last year.
The Need for an E-Babu
Once the first phase of the Mirzapur Model City Programme had demonstrated that all types of critical improvements could be achieved, concern was raised for the long-term sustainability of the improvements. A programme to achieve this was a challenge of a deeper and more complicated sort than the technical work of the first phase. E-governance can be initiated through technology, but it can only be sustained through E-babus. The most important E-babu in a municipality deals with the tax records. The following is the programme that was developed to achieve the long-term objectives of providing good E-Governance to a mofussil town.
Traditional Tax Department Structure
The main responsibility of the municipal tax department is to assess and collect property tax. Tax collectors collect house and water tax directly from property owners at site, assist in processing transfer of ownership applications and other related matters. Demand clerks maintain the hand written assessment records, related documents, and demand and collection registers, but since the introduction of the computerised system they no longer prepare bills by hand. Demand clerks distribute bills to tax collectors for collection and transfer collection entries from receipt books to demand registers. They are expected to issue notices and initiate other actions to collect overdue bills, but rarely do. Demand clerks address public complaints and information requests, and supply authenticated copies of ownership documents. Every five years they are expected to assist in the property survey and reassessment, and to routinely record casual assessment of new properties. However, there was no functional management system to make this happen until the introduction of the new municipal information management system.
|Fig.3: Transition from babus to E-babus
First Stage E-Babu Procedures
Property assessment records were computerised in 1996 and since 1999 have been reconciled with the tax billing and collection records. Only two computer operators can now maintain all the assessment, and billing and collection records, print bills, enter tax collection records, assist with assessment and reassessment of properties and backup all records. These computer operators do most of the work that the 12 demand clerks used to do. In the early stages of the computerised record system the municipality used hand written receipts to update the computer records, but with full implementation of the system this is no longer needed. Generally no action has been taken for non-payment of taxes resulting in considerable unpaid balances. Personal collection of taxes combined with the lack of penalty for late payments, or discount for early payment resulted in partial tax payments for accounts that were never cleared and heavy tax payments at the end of the Fiscal Year Tax.
Second Stage E-Babu Administrative Procedures
Relocation of the tax department to new offices in 2000 coincided with the new fiscal year and the integration of the department with the computerised information system that had been operating in parallel with the old handwritten system for the previous 4 years. The department will soon eliminate hand written entry of tax collection, assessment record changes and posting of collection. This will allow a change in staff duties so that demand clerks will be able to devote their full attention to following up the collection of overdue taxes and updating property information from a continuous inspection programme.
Third Stage E-Babu Administrative Procedures
The old practice of personal tax collection by tax collectors is terribly inefficient. In modern systems property tax, electricity and telephone bills are sent to property owners by ordinary post, the cost of which for Mirzapur would be about Rs.80,000. This can be weighed against the current staff cost of more than 1,300,000 and the total tax billing of approximately 30,000,000 in 2000/2001. The postal delivery system has been tested and is planned for introduction in Mirzapur. After introduction, if a bill is not received property owners could obtain duplicate copies of bills from the computerised system for make timely payment possible. The municipality is also considering allowing banks to collect, deposit and report bill payments on its behalf at branches throughout the city to reduce inconvenience to the public. The Rs.100,000 cost of this will be offset by improved collection and further redeployment of staff. With the change in these two procedures tax collectors will be able to concentrate on the more important work of property surveys, bringing more properties into the tax net and reassessing under assessed properties.
Fourth Stage E-Babu Administrative Procedures
Revenue inspectors rarely conduct field visits to reassess properties, monitor property construction activity, monitor property transfers, and supervise tax collection activities. Under the new E-Babu system top priority will be given to this work so that properties do not remain un-assessed or under-assessed for more than a short time. Tax collectors can be reassigned to support other staff in a rigorous programme of daily field inspections for continuous monitoring and updating of records. Incentives based on the increased tax valuation of the existing records may be introduced to achieve the needed results quickly. The first step in this system is already in place. Building permit applications are forwarded from the development authority, mapped and added to a temporary database to monitoring the progress of assessment. Extension of this system is planned to include building permits and property transfers as well.
What Does a Model City Programme Cost?
The complete infrastructure inventory included in the municipal GIS allows deficiencies to be identified by type and condition. In Mirzapur, two levels of infrastructure repair and rehabilitation were prioritised to maximise the impact from limited funds. The cost of the most basic repair and enhancement of the most critical infrastructure was estimated to be Rs.550 million or Rs.2,600 per capital. A slightly higher preferred service level, which also included street surfacing, was estimated to require about Rs.950 million or Rs.4,700 per capita.
Property tax from the new assessment is 30 million rupees per year or Rs.150 per capita. An annual surplus of Rs.25 million per year would provide Rs.950 million over a 40-year period for infrastructure repair and rehabilitation. A 2 percent loan for 40 years with disbursement of Rs.500 million over 5 years would not even provide the most basic repair and rehabilitation, let alone the preferred service level. This gap would have to be bridged from other sources such as community co-financing. As a result of a favourable physical location and previous project investment the cost of implementing the preferred investment programme is about 40 percent less than it would be in another typical city where the cost would be Rs.1.4 billion or Rs.6,700 per capita.
An Example to Other Municipalities
The dramatic success of the Mirzapur Model City approach has encouraged cities such as Vrindavan, Bangalore and Gorakhpur to implement elements of the programme. Officials from numerous cities throughout India and Nepal have visited Mirzapur and returned convinced that such work is possible for them as well. Now, the approach is being undertaken in 16 municipalities by the Government of Bangladesh.
The Bangladesh Municipal Support Project
Municipal administrative performance similar to that experience in Mirzapur and in India generally is common in Bangladesh. The increased demands for urban services, untimely depreciation of infrastructure and scarcity of financial resources have encouraged a major reassessment of the way municipalities provide services. Under the Municipal Services Project a Municipal Support Unit (MSU)has been established as a permanent organisation to provide guidance and support for the long-term reform of urban management in all the municipalities of Bangladesh. Initially, the MSU will focus its efforts on improving the performance of 16 project municipalities where repair and rehabilitation of basic infrastructure is in progress. In the long-term, the MSU will help to facilitate a fundamental change of fiscal relationships between the central government and all municipalities. The new relationship will be characterised by the introduction of a Municipal Development Fund performance-based approach to financing municipal services.
The first phase of the Municipal Support Project included investments, which focused on neglected maintenance, rehabilitation and improvements for water, sanitation, drainage, roads and solid waste services. It was hoped that this initial project assistance would encourage tax collection as well as improving operations and maintenance.
At the same time the Municipal Support Unit has started a programme that focuses on administrative and organisational changes needed to implement works, improve financial and accounting systems, and increase revenue. This requires the performance of municipal staff to be improved on a routine and not an episodic basis through the introduction of appropriate work responsibilities as well as training on practical applications of municipal work at the same time as services are improved. The Municipal Support Unit will assist in a programme of computerising municipal records, issuing tax bills, improved tax collection, reassessing properties and assessing new properties similar to the work done in Mirzapur.
Municipal Development Fund
The Municipal Development Fund (MDF) is being established as an independent entity and is expected to contribute to the development of management reforms and improved project design initiated by the Municipal Support Unit. The key to improved municipal services is increased revenue collection through adequate property assessment and tax collection. Improved performance in revenue collection is included in proposed MDF funding conditions.
The problems in good governance for mofussil towns are well known. Immediate improvements can be achieved through initial introduction of techniques that can be understood as E-Governance. However, support for these improvement can only come from improved services and sustainability from the introduction of E-Babus.