The proposition of a hike in the assessment tax for properties in Kuala Lumpur only has been met with a furore of objection. The increase, set to be announced on 17th December 2013, has drawn an almost unanimous ‘no’ from all relevant parties.
The recent announcement of an increase in the assessment tax by Federal Territories Minister Datuk Seri Tengku Adnan Tengku Mansor has not gone down well with Kuala Lumpur’s residents and MPs. Tengku Adnan has attributed the increase in the rates to the rising prices of properties in the Kuala Lumpur area.
Currently standing at 6% for residential units and 12% for commercial units, the initially-proposed increase was between 100%-300%. Set to be implemented in 2014, many deemed the raise to be unfair and unjustified.
“In view of the fact that there have been widespread and strong objections to the unjustifiable hike in assessment rates, I believe that a downward revision is no longer an option but a must for him [Tengku Adnan],” Seputeh MP Teresa Kok said in a statement.
The annual assessment, commonly paid semi-annually in two instalments, is based on the tax percentage imposed on the property’s annual value or rateable value. The annual value is calculated based on the monthly rental at arm’s length transaction multiplied by 12 months. Taxing at the same tax rate for the past 21 years, the Dewan Bandaraya Kuala Lumpur (DBKL) is allowed to raise the assessment tax amount once every five years. An example of how the tax works is:
- If a property’s annual value amounts to RM12,000 per annum (RM1,000 per month), the current rate (6%) would amount to a tax of RM720 per year. The proposed 2014 tax hike (at a maximum of 300%) would increase the annual amount to RM2,160.
Taking to the media, residents have voiced their complaints about the DBKL’s services about this assessment tax funds. Potholes, clogged drains, dirty amenities and floods are rampant in KL and many residents question whether a potential 200% increase will be reflected in the services rendered by DBKL.
“The timing is completely out. With the pending implementation of the Goods & Services Tax in 2015, the people are most definitely going to be burdened. It is not the residents’ fault that the tax has not changed in 21 years. Why should people pay for badly maintained roads and dirty public toilets?”, Associate Director of Raine & Horne, James Tan told iProperty.com.
Another concern is the toll it would take on the residents of certain areas.
“An assessment rate hike may be acceptable if it is not increased by such a large amount, which ultimately burdens the lower-income households, pensioners and owner-occupied homes. A gradual increase would have been more welcome,” said K. Aruljothi, Treasurer of the Residents Association of Lucky Gardens, Bangsar.
Taking into consideration protests from relevant parties, the proposed hike has been revised to, by between 50%-70%.
Understanding their grievances, Tengku Adnan has requested that residents express their opinions and views on the proposed assessment tax hike in an official objection letter (surat bantahan) addressed to DBKL (sample letter as per below). The letter must be sent to the DBKL office before 17th December 2013.
These objection letters will be taken into consideration during the proposal meeting, and will assist in the outcome of the 17th December 2013 announcement of the assessment tax rate.
A sample of the objection letter (surat bantahan):