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KL property tax rates cut, but owners are not cheering

Publication Date : 21-12-2013

 

Kuala Lumpur city authorities have made a concession after a public uproar over fears that property taxes would increase with a hike in assessment and a revaluation of property, but property owners in the city fear they could still be forced to pay up to three times more in taxes next year.

Instead of increasing the assessment, Dewan Bandaraya Kuala Lumpur, or KL City Hall, on Thursday cut the assessment rates for residential property from 6 per cent to 4 per cent, effective from January 1.

It cut assessment rates for commercial property from 12 per cent to 10 per cent.

But City Hall is going ahead with a major revaluation of property, for the first time in two decades. The net effect, home owners say, is still a much bigger bill.

"If they lower the rate we must pay but increase a property's value drastically by 300 per cent, it is still not good for house owners, especially retirees with small pensions," said Wong See Tin, 69, a residents' association chairman for the Overseas Union Garden neighbourhood.

City Hall announced on November 13 plans to revise property values for the first time in 21 years and bring in more tax revenue. The move would affect some 507,000 property owners, local and foreign.

The higher taxes come at a time when city dwellers are facing higher electricity tariffs and more expensive petrol. Malaysians are also bracing themselves for the new Goods and Services Tax, which takes effect in April 2015.

All that is expected to push up inflation, which was at 2.9 per cent last month, according to the Department of Statistics.

The city authorities say the revaluation is long overdue.

"We want owners to enjoy the true value of their properties," Federal Territories Minister Adnan Mansor argued at a press conference after a protest by hundreds of property owners against the hike at City Hall on Monday.

Property taxes in Kuala Lumpur have been relatively low. For example, an owner of a mid-market terrace home on Old Klang Road, 10 minutes from the city centre, might pay 360 ringgit (US$109) a year in property tax.

But if City Hall triples the valuation of the house, based on potential annual rental, even though the tax rate drops from 6 to 4 per cent, that house owner will still end up paying more in taxes.

Places of worship, cemeteries, government schools and public places for science, literature and fine arts are exempt from assessment.

Wong told The Straits Times that he and others are willing to accept a 10 to 15 per cent rise in their properties' valuation, but not a 300 per cent increase.

Lawmakers and property owners say they will sue City Hall if it rolls out the new valuations before public hearings.

"By rights, City Hall must do a hearing that is required under the law," said Tian Chua, an opposition lawmaker in the Batu parliamentary constituency.

City Hall said it will conduct public hearings from January to March next year in neighbourhoods where property owners have filed protest letters. The new property taxes will be payable starting from April next year.

Some 150,000 owners of Kuala Lumpur properties have filed protests.

 

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