Karachi collects $8.5m in property tax; similar cities collect up to 350 times more

Karachi, one of the world's largest cities, collects only about $8.5 million a year in property tax, while cities of comparable size collect between 82 and 350 times as much. The World Bank Group's board has now approved $150 million in financing for the Sindh Property Revenues Enhancement Programme (Sindh PREP), which aims to lift that figure to $85 million a year and raise compliance from 20% to 50%.

The gap matters because Sindh's local councils depend on provincial transfers for more than 95% of their revenues, the bank's country director for Pakistan, Bolormaa Amgaabazar, said. "Cities that can raise their own revenues can plan and invest for the long term," she said. "By helping Karachi collect 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 programme will strengthen urban immovable property tax collection, compliance and administration, including a management information system for billing, payment processing and grievance redress, and integrated financial management information systems across local councils. About 70% of the UIPT collected will be reinvested directly in municipal infrastructure and services in the participating councils. Funding is tied to results: annual performance assessments by an independent verification agent will decide each council's award, which will finance climate-resilient infrastructure including drainage, sewerage, schools, fire stations, roads and street lighting.

The programme covers Karachi's 25 local councils, with 3.58 million residents as primary beneficiaries. A $40 million Investment Project Financing component will extend property surveys and UIPT administration to 20 local councils in Sindh's other urban centres, with indirect benefit to about 4.5 million people. Davison Muchadenyika, a senior urban development specialist at the World Bank, said 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.