A.) There is a technology in the military tree you can research that adds a "Raze City" button to the city menu when you look at it (in the book in game)
~ or ~
B.) Just skip that, highlight the city, and press 'x' on the keyboard instead .. and it'll raze (after a "Are you sure?" style prompt)
.. both work .. one obviously works from the start, making the tech version pretty silly to wait for.
