Urban property tax system: WB to launch USD150m project to boost Sindh’s collection
ISLAMABAD: The World Bank is preparing a USD 150 million financing programme for overhauling Sindh’s urban property tax system to increase revenue collection, strengthen municipal finances and improve service delivery across 45 local councils in the province.
According to the World Bank’s document, the proposed Sindh Property Revenues Enhancement Program will be presented for approval later this year, after a technical review scheduled for August 31, 2026.
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The programme will be financed through the International Bank for Reconstruction and Development (IBRD) using a Program-for-Results (PforR) instrument, reflecting the Bank’s emphasis on linking financing with measurable improvements in tax collection and expenditure management.
The World Bank said Pakistan’s Urban Immovable Property Tax (UIPT) remains one of the country’s most under-utilised revenue sources despite its potential to finance local development. It noted that weak administrative capacity, incomplete property records and poor enforcement have kept property tax revenues at only 0.13 percent of GDP, far below the 0.3 to 0.6 percent of GDP collected by comparable low- and middle-income countries.
The Bank also highlighted the heavy dependence of local governments on provincial transfers, stating that more than 95% of local government revenues come from provincial allocations, leaving municipalities with little fiscal autonomy or incentive to mobilise their own resources. This structural weakness, it said, has contributed to persistent gaps in municipal services and infrastructure.
The proposed programme seeks to address these challenges by shifting from creating administrative systems to a performance-based revenue collection and expenditure management framework.
The overall development objective is to improve Urban Immovable Property Tax revenue collection and expenditure management in 45 local councils across Sindh.
Of the total project cost of USD 150.38 million, the programme component accounts for USD 110 million, while an Investment Project Financing (IPF) component of USD 40 million will finance technical assistance and institutional strengthening. The World Bank will provide USD 150 million, leaving a financing gap of USD 0.38 million. The programme has been structured around five results areas.
The first focuses on improving UIPT collection, compliance and administration through a fully digitised Management Information System (MIS) in 25 local councils of Karachi, backed by a performance-based incentive framework.
The second aims to strengthen municipal service delivery by financing priority urban infrastructure schemes in Karachi’s 25 local councils.
The third result area targets institutional strengthening, supporting local councils and the Sindh Local Government Department in enhancing tax compliance, revenue mobilisation and administrative capacity.
The fourth seeks to modernise revenue and expenditure management by strengthening the Integrated Financial Management Information System (IFMIS) covering budgeting, human resources and payroll in Karachi’s councils, while extending the system to 20 additional local councils elsewhere in Sindh.
The fifth, financed through the IPF component, will support institutional capacity building, programme management, the expansion of IFMIS and the modernisation of property tax and land administration systems in major cities outside Karachi.
The World Bank said the programme is designed to tackle systemic constraints in urban property taxation while enabling local governments to generate more predictable revenues for public services and infrastructure.
Copyright Business Recorder, 2026