The World Bank's Board of Executive Directors approved $150 million in financing for the Sindh Property Revenues Enhancement Programme (Sindh PREP). The programme will improve urban property tax collection and strengthen municipal service delivery in Sindh.
"Cities that can raise their own revenues can plan and invest for the long term," said Bolormaa Amgaabazar, World Bank Country Director for Pakistan. "Today, Sindh's local councils depend on provincial transfers for more than 95 percent of their revenues.
By helping Karachi collect the property taxes from its residents and businesses, and by reinvesting most of that revenue in local services, this programme will give Sindh's cities the means to finance the infrastructure they need." The Sindh Property Revenues Enhancement Programme (Sindh PREP) will support the government of Sindh in improving urban immovable property tax (UIPT) collection and strengthening municipal service delivery capacity in selected local councils of Sindh.
Despite being one of the world's largest cities, Karachi currently collects only approximately $8.5 million annually in property tax while cities of similar size collect 82 to 350 times more. The programme aims to increase this to $85 million annually - raising compliance from 20 to 50 percent.
It will do so by strengthening UIPT collection, compliance, and administration, including through deployment of a UIPT management information system for billing, payment processing, and grievance redress, and by rolling out integrated financial management information systems across local councils. About 70 percent of collected UIPT revenues will be reinvested directly into municipal infrastructure and services in participating local councils.
The programme will benefit Karachi's 25 local councils. Its primary beneficiaries are the 3.58 million people living in these councils, where service delivery investments will be financed.
Funding will be linked to results: annual performance assessments, conducted by an Independent Verification Agent, will determine the awards each council receives, and these awards will finance the rehabilitation of climate-resilient municipal infrastructure and services, including drainage, sewerage, schools, fire stations, roads, and street lighting.
The programme also includes an Investment Project Financing component of $40 million that will expand property surveys and UIPT administration to 20 local councils in Sindh's other urban centers, with an indirect benefit to approximately 4.5 million people. "Karachi has significant untapped potential to generate revenues from its property base and use those resources to fund the infrastructure its residents and businesses need.
This programme will help Sindh strengthen fiscal sustainability enabling cities to plan, invest, and deliver services from their own resources effectively," said Davison Muchadenyika, Senior Urban Development Specialist at the World Bank.