First Published: 7:01am, Dec 02, 2013
Last Updated: 7:05am, Dec 02, 2013
Zero engagement, Public Relations exercise was non-existent.
The simple, routine exercise of revaluation has somehow now become a controversy for the lack of an apparent justification given the magnitude of the increase and explanation. Perhaps people in government think there is no need for some elementary PR; having power is enough. There was practically no public engagement, seeking feedback or consultation.
If such a simple task of revaluing the properties in the City of Kuala Lumpur cannot be carried out diligently, I am concerned with the impending introduction of the more complex Goods & Services Tax (GST). Can you trust them to ‘properly’ handle the levy and collection of GST?
HBA express its dismay with the unilateral and arbitrary proposal by Dewan Bandaraya Kuala Lumpur (DBKL) to increase the revaluation of properties in Kuala Lumpur which includes both private and commercial properties. It is not that DBKL cannot exercise the process of revaluation under the Local Government Act but because they ‘simply do it’; literally speaking. The media has widely reported that the increases are between 70% and up to 300% increase in certain areas.
The reasons given by DBKL as reported in the media for the increase are as follows: the last increase was more than 20-years ago; and property prices have increased in value.
HBA wishes to put forth our rebuttal to DBKL based on the following points:
Most private properties are owner occupied
A vast majority of the private homes in Kuala Lumpur (for the matter) are owner occupied. This means that the home is bought for own occupation of the owner and his family. Many are retirees and pensioners
Based on this logic, regardless of the increase in the market value of the said property, the owner does not reap any benefit as he is still living in the said property. It would thus be unfair to penalize the owner for the increase in property prices when the owner has not enjoyed any such benefit arising from the continuous ownership.
The owner would only be able to enjoy any increase in property prices when the owner decides to sell the said property to a third party. To say that property owners should be thankful to DBKL for affixing a high valuation on the property because property owners would be able to sell their property at a higher market value is preposterous. Assessment is based on market rental and not vice versa.
Many private homes are long term investments
Many individuals use private homes as long term investment to fund post retirement needs or to fund their children’s education expenses. It would be very burdensome to these people who have managed to save enough to acquire a second private home as long term investment as the returns from such an investment are just barely enough to cover expenses of the property itself such as savage increase of rates.
Increase in Assessment Rates does not translate into better services
Would such revision commensurate with the quality of services to be provided by DBKL to justify such increment? Currently, it seems that there is no discernible improvement of either service or facility. It is only reasonable to expect a 300% increase in level of service quality if DBKL is going to increase the assessment rates by up to 300%.
For DBKL to increase assessment rates without promising an equal increase in service quality level is morally wrong and akin to snatching candy from a baby; the culprit merely snatches the candy away knowing that the baby cannot fight back.
Poor Planning and Indiscriminate approvals
Poor planning and indiscriminate approvals granted by the city hall on new development without in depth study on the impact of surrounding environments especially the existing housing estates have overloaded the existing servicing highways, byways, main carriage ways with excessive volume of traffics originally not catered for, at many places to a choking level culminating in long crawls at peak hours.
In certain neighbourhoods, they are plagued by the haphazard parking along the road reserves due to lack of enforcement.
Against Government’s aspiration to help the Rakyat
Our honorable Prime Minister has decided to lower the personal income tax rates to lighten the burden of the Rakyat in view of the impending GST. DBKL’s move to increase the assessment rates by such a high rate will be burdensome to the Rakyat and goes against the very grain of our PM wishes to lighten the Rakyat’s burden.
HBA does recognise that there are speculators who may have amassed multiple properties. However, an increase in assessment rates will only penalize the majority of private home owners who only have one or perhaps two (2) properties.
HBA has in the past proposed a higher Real Property Gains Tax (RPGT) and also Stamp Duty for the transfer of property be imposed on such speculators who have many properties. With the announcement of BUDGET, 2014 by our Prime Minister on 25th October, 2013 and the recent strict lending guidelines imposed by Bank Negara such unhealthy manipulation of property prices has been, to a certain degree being curbed and muted.
The effects are now shown by the recent announcement by the National Property Information Centre (NAPIC) under the Valuation & Property Services Department (JPPH) data ‘that property market is expected to see slower growth this year (2013)’ as there will be an adjustment in terms of prices, which is expected to moderate’.
Question: Does that mean that DBKL will do another revaluation for a subsequent corresponding reduction following the announcement?
HBA urges DBKL to reconsider its decision to increase assessment rates for private homes in KL based on the above points. If DBKL wishes to increase the assessment rates for private homes and all commercial properties to cover the increase in operating cost, HBA proposes an increase of not more than ten percent (10%) of the current tax.
Advice to Tax payers
Forget about what the Mayor and the Minister of Federal Territory have assured us of a possible reduction and purportedly understanding the taxpayers’ plight and hardship. Then, why send out the ‘Notice of Revision of the Valuation List’ under Section 141 of the Local Government Act, 1976 (LGA) in the first place?
Let’s not take any risk by ignoring our rights and be trusting on rhetoric. Let’s comply with the law and its due process by filing our ‘Notis Bantahan’ ( NOT LATER than Dec 17 ) pursuant to Section 142 of the LGA rather than be caught in a situation of ‘by default’ or Mr Mayor and Minister saying that there are only a ‘handful of official written objections’. Go ahead flood them with Objection letters
We have prepared three (3) templates as a guide for objections against DBKL hike and the same can be downloaded from our website at: http://www.hba.org.my. The templates are merely guides to facilitate the process. You are at liberty to improvise the drafts as well as seek independent professional advice, if in doubt.
An excerpt of Section 142 of the Local Government Act, 1976 (LGA) is reproduced below for tax payers to understand:
Section 142: Objections.
(1) Any person aggrieved on any of the following grounds-
(a) that any holding for which he is rateable is valued beyond its rateable value;
(b) that any holding valued is not rateable;
(c) that any person who, or any holding which, ought to be included in the Valuation List is omitted therefrom;
(d) that any holding is valued below its rateable value; or
(e) that any holding or holdings which have been jointly or separately valued ought to be valued otherwise,
may make objection in writing to the local authority at any time not less than fourteen days before the time fixed for the revision of the Valuation List.
(2) All objections shall be enquired into and the persons making them shall at such enquiry be allowed an opportunity of being heard either in person or by an authorised agent.
Chang Kim Loong, the Honorary Secretary-General of the National House Buyers Association (HBA), would like to come clean and declare that he is a rate-payer and has a vested interest in challenging the proposed rate hike by DBKL