Property tax

Imkong Walling

In the Naga village of time immemorial, life was simple, barring trophy head-hunting. There was no organised government, as it is known today, tasked with handling day to day affairs like finances and security of the village. Each member was a cultivator-cum-hunter, who toiled to survive. Every able-bodied male was a soldier, who fought to defend or raid. As the story goes, taxation, to the simple folks then, was unknown and thus, a non-existent concept. 

On the contrary, Nagaland is no stranger to taxation. Tributes were exacted from weaker villages back in the day. In the present day, there is a land tax, in operation, dating back to the British colonial suzerainty and an all too obvious parallel taxation regime by the Naga Political Groups. 

Still, a supposedly no-tax culture of old, together with special Constitutional privileges accorded by the Government of India, seems to have engendered a mindset hostile to state taxation in Nagaland. The perceived hostile attitude partly ensuring the death of the erstwhile Nagaland Municipal (NM) Act after more than 20 years of little to no use; an Act, which had a provision for property tax in three designated Municipal cities/towns. 

The argument was that Nagaland, as a Scheduled Tribe (ST) category state, enjoyed tax exemption, including property taxation, an argument further cemented by Article 371 (A), which guarantees to the ST community of the state sole ownership over their lands, which is further interpreted as rights over anything that is built or grown on it. It has had a fund-poor state government, chiefly dependent on dole-outs from the Government of India, at odds with the community on the prospect of raising internal revenue.

Conditioned to enjoying to such Constitutional privilege, the idea of property tax was anathema to a people, who regards residential houses non-taxable. It apparently was the basis for the opposition to property taxation. However, there was another dynamic at play, which was not accounted for. It pertained to a perceived misreading of the provision outlining the mode of determining property tax in the now repealed NM Act. 

The general perception was that of a tax calculated as a percentage of a property’s market value on the whole. It was not so however. The property tax would have been determined based on a formula, which first require establishing the annual rateable value (ARV) of a landed property, followed by calculating the final taxable amount as a percentage of the ARV.  

For ease of understanding, ARV can be imagined as a predetermined percentage of the market value of a landed property, the rate of which was capped at 10 percent of the total valuation. The rate of (property) tax was capped at 15 percent of the ARV. In other words, the rate of tax would be 15 percent (maximum) of one-tenth of a property’s market value. For comparison, the ARV is fixed at 7.5 percent of a property’s market value, presently. 

What the state government failed to do was addressing the perceived misconception. 

The writer is a Principal Correspondent at The Morung Express. Comments can be sent to [email protected]