Published: Saturday November 30, 2013 MYT 12:00:00 AM
Updated: Saturday November 30, 2013 MYT 12:10:39 PM
Zero engagement, public relations exercise non-existent
THE simple, routine exercise of a property revaluation in the city of Kuala Lumpur has somehow turned controversial due to the lack of apparent justification, given the magnitude of the increase and scarcity of explanation.
Perhaps, the people in Government think there is no need for some form of elementary public relations and that having power is enough. There was practically no public engagement, consultation or attempt to seek feedback from stakeholders.
If such a simple task as revaluing the properties in Kuala Lumpur cannot be carried out diligently and in a responsible manner, I am concerned with the impending introduction of the more complex goods and services tax (GST). Will the levy and collection of the GST be properly handled?
The National House Buyers Association (HBA) is dismayed with the unilateral and arbitrary proposal by the Kuala Lumpur City Hall (DBKL) to increase the revaluation of properties in Kuala Lumpur for both private and commercial properties. It is not that DBKL cannot exercise the process of revaluation under the Local Government Act, but the issue is that it is “simply doing it”, literally speaking. The media has widely reported that the increase could range between 70% and 300% in certain areas.
The reasons given by DBKL for the increase as reported in the media are as follows:
(i) the last increase was more than 20 years ago; and
(ii)property prices have increased in value.
HBA would like to highlight certain pertinent issues which should be taken into consideration.
(i) Most private properties are owner-occupied
A majority of private homes in Kuala Lumpur are owner occupied, and 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 penalise the owner for the increase in property prices when he 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 he 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.
(ii) Many private homes are long-term investments
Many individuals use private homes as long-term investment to fund post-retirement needs or 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 a long-term investment as the returns from such an investment are just barely enough to cover expenses of the property itself such as this savage increase of rates proposed by DBKL.
(iii) An increase in assessment rates does not translate into better services
Would such a revision commensurate with the quality of services to be provided by DBKL in justifying such an increment? Currently, it would seem that there is no discernible improvement in either service or facility. It is only reasonable to expect a 300% increase in the 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 the level of service quality 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.
(iv) Poor planning and indiscriminate approvals
Poor planning and indiscriminate approvals granted by DBKL to new developments without indepth studies on the impact to the surrounding environment, especially existing housing estates, have overloaded the existing infrastructure. The servicing highways, byways and main carriageways today have excessive volume of traffic that was not catered for originally. This has resulted in long crawls at peak hours in many places.
In certain neighbourhoods, the communities are plagued by haphazard parking along the road reserves due to lack of enforcement.
(v) Against the Government’s aspiration to help the rakyat
Our honourable 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’s wishes to lighten the rakyat’s burden.
HBA does recognise the fact that there are speculators who may have amassed multiple properties. However, an increase in assessment rates will only penalise the majority of private home-owners who only own one or perhaps two properties. HBA had in the past proposed a higher real property gains tax (RPGT) and stamp duty for the transfer of properties to be imposed on such speculators who had amassed numerous properties. The measures announced in Budget 2014 by our Prime Minister and the recent strict lending guidelines imposed by Bank Negara have, to a certain degree, curbed and muted such unhealthy manipulation of property prices. The effects can be seen in the recent announcement by the National Property Information Centre or Napic under the Valuation & Property Services Departmentdata “that the 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”.
This, in turn, brings us to the question: “Does this mean that DBKL will undertake another round of revaluation for a subsequent corresponding reduction following the announcement?”
Advice to taxpayers
HBA urges DBKL to reconsider its decision to increase assessment rates for private homes in Kuala Lumpur based on the above-mentioned points. If DBKL wishes to increase the assessment rates for private homes and commercial properties to cover the increase in operating costs, then HBA proposes an increase of not more than 10% of the current tax.
Although the Mayor and Federal Territory Minister have assured the people of a possible reduction as they understood the taxpayers’ plight and hardship, the ‘Notice of Revision of the Valuation List’ under Section 141 of the Local Government Act, 1976 (LGA) was sent out. Why is this so?
To the taxpayers, 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 Mr Minister using the usual “there were only a handful of official written objections” rhetoric. The objection letters are absolutely necessary.
We have prepared three templates as a guide to object against the proposed hike, which can be uploaded from our website at www.hba.org.my. The templates are merely guidelines to facilitate the process. You are at the 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) has been reproduced below for taxpayers to understand:
Section 142: Objections.
·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 there from;
(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 an 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.
·All objections shall be enquired into and the persons making them shall at such enquiry be allowed an opportunity to be heard either in person or by an authorised agent.
I would like to come clean and declare that I am a rate-payer and have a vested interest in challenging the proposed rate hike by DBKL.
Go ahead, flood DBKL with letters of objection.
Chang Kim Loong, AMN, is the Honorary Secretary-General of the National House Buyers Association (HBA): www.hba.org.my, a non-profit, non-governmental organisation (NGO) manned by volunteers. He is also an NGO councillor at theSubang Jaya Municipal Council.