ISLAMABAD – The World Bank has approved $150 million in financing for a programme to improve urban property tax collection and strengthen municipal services in Sindh, according to a statement.
The Board of Executive Directors of the World Bank Group cleared the Sindh Property Revenues Enhancement Program (Sindh PREP) on October 30.
World Bank Country Director for Pakistan Bolormaa Amgaabazar said cities that can raise their own revenues are better placed to plan and invest for the long term. She noted that Sindh’s local councils currently rely on provincial transfers for over 95% of their revenues. By helping Karachi collect property taxes from residents and businesses, and by putting most of that money back into local services, the programme will give Sindh’s cities the means to fund the infrastructure they need, she said.
The programme will help the provincial government improve collection of the urban immovable property tax (UIPT) and build service delivery capacity in selected local councils.
Karachi, despite being one of the world’s largest cities, collects only about $8.5 million a year in property tax, while cities of similar size collect between 82 and 350 times more. The programme aims to raise Karachi’s annual collection to $85 million and lift compliance from 20% to 50%.
To achieve this, it will strengthen tax collection, compliance and administration, including a UIPT management information system for billing, payment processing and grievance redress. Integrated financial management information systems will also be introduced across local councils.
About 70% of the revenue collected will go back into infrastructure and services in the participating councils. The programme will cover Karachi’s 25 local councils, with 3.58 million residents as the main beneficiaries.
Funding will depend on results. An Independent Verification Agent will carry out annual performance assessments to determine the awards each council receives. These will pay for the rehabilitation of climate-resilient infrastructure and services, including drainage, sewerage, schools, fire stations, roads and street lighting.
The programme also has a $40 million Investment Project Financing component to extend property surveys and tax administration to 20 local councils in other urban centres of Sindh, which is expected to indirectly benefit around 4.5 million people.
