KUALA LUMPUR, Nov 29 — Doubling property tax overnight is a sure-fire way to land many people in debt, a city business association has warned as the Kuala Lumpur City Hall (DBKL) pushes ahead with its proposal to hike assessment rates on real estate owners here.
The Association for Shopping Complex and Highrise Management said it is unfair on business owners to have to face a sudden increase in annual assessment of their premises as city administrators work to catch up with property values that have not been raised in over two decades.
“After 21 years, you can’t just decide to review it. It’s supposed to be done every five years according to the Act,” association president H.C. Chan told The Malay Mail Online when contacted recently, referring to the Local Government Act 1976 which governs revenue generation by local authorities.
“Structurally, if it is done every five years, businesses can plan for it. Every business has a budget, but if you impose a hike suddenly like this, any business would be caught in debt.
“You have to look carefully at the timing, otherwise businesses will end up with unplanned or unscheduled expenditure,” he said.
Under Section 137 (3) of the Act, a local authority is required to prepare and complete a new “Valuation List” — which covers all holdings not exempted from rate payment — every five years or within an extended period as determined by the state authority.
Yesterday, Federal Territories and Urban Well-being Minister Datuk Seri Tengku Adnan Tengku Mansor said the authorities have no choice but to implement the proposed new assessment rates in January, as DBKL needs to abide by the rules under the Act.
Amid a spike in property prices in the Klang Valley, Tengku Adnan also said that the authorities were trying to correct the value of property.
Today, the minister claimed to not have heard of any complaints from business owners about the hike in property taxes, but assured that the new rates will not be a burden on their operations.
Tengku Adnan was, however, evasive when asked to respond to Chan’s claim that businesses would be sent into debt with the sudden increase in assessment rates.
“We haven’t decided yet. When we give the actual amount, I might decide to give a 100 per cent reduction, or an 80 per cent reduction, maybe even a lower assessment rate compared to now.
“The problem is, please don’t spin it as if we are trying to punish the people or get more money... we have to be fair to both the property owners and DBKL,” Tengku Adnan told a news conference at his office here in the wake of public outrage over the hike.
Though the authorities have the discretion to set how long a “Valuation List” remains in effect, Chan said it is bad for business to impose a sharp increase in assessment rates, especially after the authorities have left it stagnant for such an extended period.
“Twenty-one years is more than four terms (to review the Valuation List), and businesses will be caught in a sharp increase in rates.
“Our main concerns are the abruptness and the quantum of the hike, because this will have a large impact on business. If you look at shopping malls, our business is related to Visit Malaysia Year 2014. This will impact our cost because we have been preparing for years for Visit Malaysia Year 2014.
“We are already globally ranked among the top shopping destinations in the world because we are cost-competitive. But if we have such a sudden hike, that will affect our cost-competitiveness,” he said, adding that shopping malls typically fork out millions of ringgit for assessments every year.
Kuala Lumpur has been voted the world’s fourth-best shopping destination in the world for two years running by CNN Travel, and also ranked as the second-best shopping destination in Asia-Pacific in a Globe Shopper Index survey.
Shopping contributed a whopping RM18.6 billion in tourism revenue last year, accounting for 30.7 per cent of the country’s total tourism receipts valued at RM60.6 billion, according to figures from the Tourism and Culture Ministry.
“The authorities should look at a more longer-term strategic plan. Rather than increasing City Hall’s revenue from assessment alone, they need to look at the multiplier effects of the industry.
“With tourists come shopping, and that would also benefit everything from transportation to restaurants. This would generate a lot more money comparatively... we think this plan is short-sighted,” Chan said.
The proposed increase in assessment rates had outraged the public, and even Umno Federal Territory leaders over the past few weeks, after homeowners received notices from DBKL informing them of a hike of between 100 and 250 per cent to their existing annual rates.
Officials from the ministry and City Hall had explained that the hike was necessary to raise funds to cover the cost of improving services provided by the local authority, while also considering the fact that this would be the first hike in two decades.
