Cash-strapped Corporation of Chennai doesn't have the funds to pay the salaries of contract workers but it is set to fall short of its property tax revenue target for a second successive year.

This year is likely to be much worse than the last, with the civic body collecting only 302 crore of its targeted 550 crore till January 9 for the fiscal 2013-2014 — a shortfall of 248 crore. It fell short of its target of 500 crore in 2012-2013 by 39 crore.

Because property tax is the corporation's main source of revenue, officials say a defict is likely to adversely impact various infrastructure projects like the setting up of bus shelters, construction and maintenance of public toilets, the laying of new roads, garbage clearance and payment of wages and arrears of employees of the civic body. The corporation's dog catchers went on strike recently over not being paid salaries for more than two months.

The city has among the lowest property tax rates in metros in the country because the corporation has failed to revise the tax structure since 1998, despite a law stipulating that it be revised once every five years.

The corporation collects property tax twice a year, by April 15 and October 15. But only 60% of people pay on time.

Officials are pinning hopes on last-minute payments to enhance the collection this fiscal. "We expect to collect larger amounts of the tax in February and March because most people pay taxes only in the last two months of the financial year," a senior corporation official said. "But it is definitely going to be difficult to meet the target of 550 crore this year."

Tax collectors receive 78% of property tax payments and zonal collection centres 16%. Around 4% is paid online and just 2% of residents pay through banks. Officials say shortage of staff has affected tax collection this year.

"More than 273 tax collectors in 15 zones receive tax payments for around 13 lakh properties. We will soon procure 300 new handheld devices to streamline the process and help increase the collection," the official said.

Another reason for the low revenue is that the civic body does not have the power to penalise or fine property owners for late payments or failure to pay the tax. Officials said they had proposed that taxpayers who fail to make payments within the half-yearly deadlines be fined 2% of the sum they are required to pay as property tax.

The corporation is also wary of naming property tax defaulters in the city, as TOI reported recently. Several large establishments in the city including hotels, shopping malls and hospitals owe the civic body crores of rupees in unpaid property tax.