Dawn.com

KMC eyes Rs1bn annual revenue from tax on hotels, marriage halls

KARACHI: The Karachi Metropolitan Corporation (KMC) is preparing to impose a new tax on hotels, restaurants, guest houses, lodges, marriage halls, marquees, marriage lawns, Airbnb properties and wedding banquet facilities to generate Rs1 billion annually. If approved by the City Council, the ‘entertainment tax’ will be collected at the rate of one per cent of the total bill generated by hotels, marriage halls, etc. Officials said that the municipal authority intends to seek approval for the tax in its upcoming budget for the next financial year. In a public notice, the KMC Municipal Commissioner Abrar Jaffar has invited public feedback on the proposal, setting June 10 for a hearing on objections and suggestions at the corporation headquarters. Public hearing on proposed ‘Entertainment Tax’ set for Wednesday at KMC head office According to the public notice, the KMC’s tourism department is seeking to strengthen its financial position and improve public services. To achieve this, it said, the corporation plans to amend the existing tax gazette by introducing a new category titled “Entertainment Tax – City Tourism and Hospitality,” along with its corresponding bylaws. The notice stated that under the Sindh Local Government Act, 2013, KMC is authorised to impose taxes, rates, tolls and fees within its jurisdiction. The municipal body is now looking to boost its revenue collection through the proposed entertainment tax, which the officials say could become a significant source of income. “We are eyeing the generation of one billion rupees through the entertainment tax,” the KMC spokesman said in a response to a query about the estimated revenue expected through the newly proposed tax. The proposed tax would be the second major move by the KMC to expand its tax net after imposing MUCT in July 2024, which is collected through K-Electric (KE) bills every month, generating around Rs4bn in revenue annually from Karachiites. Karachi Mayor Barrister Murtaza Wahab has publicly said on several occasions that the MUCT revenues are being used for city development as well as for the payment of pensions and dues of municipal employees. The KMC and the KE had signed an agreement in June 2022, which finally became effective from July 2024 after the City Council approved the levy of the charges. According to the agreement, the KE would collect the MUCT from its domestic and non-domestic consumers living within the jurisdiction of KMC through their monthly power bills. However, opposition representatives, critics and leaders of KMC employees believe that the objectives of MUCT have still not been achieved. Opposition Leader in the City Council, Saifuddin Advocate, did not oppose the implementation of the “Entertainment Tax” itself. Rather, he questioned the performance of the Pakistan Peoples Party-led city government, arguing that if an “incompetent” administration has failed to make proper and justified use of the MUCT, how can it justify generating additional revenue? “You [Mayor Wahab] should tell us what work has been carried out with the Rs4 billion collected under the MUCT, and how it has provided relief to the people of Karachi,” he asked. “Why is Karachi’s money not being spent on its residents? What improvements have been made to Karachi’s infrastructure over the last one-and-a-half years since you began collecting MUCT? So it’s not about revenue generation; it’s solely about the exploitation of financial resources”, he added. According to KMC Sajjan Union (CBA) chief Zulfiqar Shah, hundreds of retired KMC employees are still waiting to receive their pensions and other outstanding dues. “MUCT has brought us no benefit,” he said. “Our workers have been suffering since 2019. The total dues owed to our workers amount to Rs14 billion. So far, our share has consisted only of promises and assurances.” Published in Dawn, June 8th, 2026