Outdoor advertisers may soon be presented with tax bills only marginally smaller than the huge hoardings erected by them.

Dispensing with separate tax slabs for hoardings located on its own on private land, the Indore Municipal Corporation has decided to levy taxes at a flat rate of Rs 30 per sq ft annually from outdoor advertisers.

A proposal to this effect was cleared by the mayor-in-council at its last meeting and the new tariff regime would be tabled at the general council meeting for final approval.

Until now, owners of hoardings located on private and municipal land were required to pay Rs 12.50 per sq ft as tax with the latter being charged an additional Rs 18.75 as land premium.

Under the new tax regime, however, the two charges have been clubbed together and owners would be required to pay an yearly fee of Rs 30 per sq ft per annum for advertising sites.

A total of 1,668 hoardings tower over the city streets; the number being divided roughly equally between private and municipality owned sites. The present hike is the second in less than a year. The corporation had earlier raised the tax in this year’s budget from Rs 6.25 to Rs 13.25 per sq ft for privately-owned sites.

Taxes for billboards erected on municipal land zoomed up from Rs 18.75 to Rs 30 per sq ft.

Over the past 5 years, levies imposed on outdoor advertisers have registered a 300 per cent rise. In 2000, billboard owners were required to pay Rs 5 per sq ft - a sixth of what they will have to shell out now.

Not surprisingly, the unrelenting squeeze has taxed the patience of an industry for which ‘size matters’ is an article of faith. Especially as it comes at a time when the corporation has threatened to cancel all licences and hand over contracts to a Delhi or Mumbai-based agency.

The corporation, in fact, returned fees paid in advance by advertising agencies reportedly because it wanted to auction the 800-plus hoardings on municipal land afresh.

The Indore Hoardings Traders’ Association (IHTA), an Umbrella organisation of 25-odd advertising agencies, has moved court to protest non-acceptance of fees and the matter is currently sub judice.

Although the fresh tariff would not be implemented until the court ruling comes on the issue, a mere mention of the hike makes advertisers bristle with rage.

“The corporation has been raising taxes continuously while reducing hoarding sites in a bid to earn profits from margins rather than volume,” pointed out IHTA president Rajesh Jain.

An exercise, Jain claims, is certainly doomed. “Pickings from taxes levied on outdoor advertisements have dwindled to Rs 80 lakh from over Rs 1 crore and continue to plummet steadily,” he says. The cut in earnings, he says, is adversely affecting the 1,000-odd persons who depend on the trade for their livelihood.

(Source: http://www.business-standard.com/common/storypage.php?storyflag=y&leftnm=lmnu2&leftindx=2&lselect=1&chklogin=N&autono=201446 )