Municipal corporations need to enhance their sources of revenue through reforms in property tax, rationalisation of user charges, and better collection mechanisms, an RBI report has suggested. The elasticity of property tax revenues, the predominant source of tax revenue, can be improved through adopting property tax formulae which are more reflective of property valuation, it said. The 'Report on Municipal Finances' released by the Reserve Bank on Wednesday noted that the demand for high-quality public services in urban areas is growing rapidly with a rising urban population. "Yet municipal corporations (MCs) in India invested with this responsibility generate limited revenues and rely heavily on the upper tiers of the government for their funding needs, limiting their operational flexibility," it said. State-specific strategies to strengthen MC finances through local taxation reforms, better enforcement, augmenting institutional capacity and transparent financial management are .