The Karachi Metropolitan Corporation (KMC) is planning to introduce a new entertainment tax on hotels, restaurants, guest houses, marriage halls, marquees, marriage lawns, Airbnb properties, and wedding banquet facilities in a move aimed at generating approximately Rs1 billion annually.
According to KMC officials, the proposed levy would be charged at the rate of one per cent of the total bill generated by hospitality and event-related businesses operating within the city’s jurisdiction.
The municipal authority is expected to seek formal approval for the tax through its upcoming budget for the next financial year.
In a public notice, KMC Municipal Commissioner Abrar Jaffar invited citizens and stakeholders to submit objections and suggestions regarding the proposal. A public hearing has been scheduled for June 10 at the KMC headquarters.
According to the notice, KMC’s Tourism Department intends to strengthen the corporation’s financial position and improve public services by introducing a new category titled “Entertainment Tax – City Tourism and Hospitality” through amendments to the existing tax framework and relevant bylaws.
The notice stated that under the Sindh Local Government Act, 2013, KMC has the authority to impose taxes, rates, tolls, and fees within its jurisdiction.
Officials believe the proposed entertainment tax could become a significant source of revenue for the city government.
“We are targeting revenue generation of around Rs1 billion through the entertainment tax,” a KMC spokesperson said.
The proposed levy would mark KMC’s second major effort to broaden its revenue base following the introduction of the Municipal Utility Charges and Taxes (MUCT), which became effective in July 2024.
MUCT is collected through monthly electricity bills issued by K-Electric and currently generates an estimated Rs4 billion annually.
Karachi Mayor Murtaza Wahab has previously stated that revenue collected through MUCT is being utilized for city development projects as well as the payment of pensions and outstanding dues of municipal employees.
The proposal has sparked criticism from opposition members and labor representatives, who argue that KMC has yet to demonstrate tangible benefits from revenues already collected under MUCT.
Opposition Leader in the City Council, Saifuddin Advocate, questioned the city administration’s performance, asking how the government plans to justify additional taxation when concerns remain over the utilization of existing funds.
He called on the city administration to explain how the billions collected through MUCT have improved Karachi’s infrastructure and public services.
KMC Sajjan Union (CBA) chief Zulfiqar Shah also expressed concerns, claiming that hundreds of retired municipal employees are still awaiting pensions and other outstanding payments.
According to Shah, KMC workers are owed approximately Rs14 billion in unpaid dues, adding that employees have yet to see meaningful benefits from the revenue generated through MUCT.
The proposed entertainment tax will now be subject to public consultation before being presented to the City Council for approval as part of the upcoming budget.