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Assessment study welcomed but increment should be held off

Source: the Star Nov 30

Many local leaders in Selangor do not see the necessity to raise the assessment for properties in the state for 2014.

It was announced at the Selangor State Assembly yesterday that the state government would be increasing the assessment fee in the near future and was currently studying ways of implementation.

“It is a good exercise if the state wants to carry out revaluation but as a rule, assessment hikes should only be a last resort,” said Petaling Jaya City (MBPJ) councillor Derek Fernandez.

He said there were many other ways for a local government to bring in more revenue, through non-rate revenue such as billboard rental, licence fees and various other forms of rental charges.

Agreeing with him is Subang Jaya Municipal (MPSJ) councillor Chang Kim Loong who said assessment hikes were unnecessary at the moment.

“Local governments should see how much of non-collectible revenue they have at the moment and step up efforts on recuperating that rather than increase assessment fees,” he reasoned.

He said even if there was a raise, residential properties that were not renovated or were old should be exempted, especially those occupied by senior citizens and low- and middle-income groups.

Ara Damansara Residents Association (ADRA) committee representative Albert Lau said the state government would need to justify the increment.

“It can be accepted as long as it is justified and they do not slack in performing their duties,” he said.

He added that the raise should be reasonable and not a sudden shocking 200% hike.

PJS9 Rukun Tetangga deputy chairman Mohd Noor Ahmad said the assessment fee should not be raise as this would burden the people further.

Bandar Puteri 11 Residents Association chairman Alice Choo agreed, saying this was not the right time to raise the amount.

Subang Jaya Municipal Council (MPSJ) councillor Loka Ng urged the state government to conduct a comprehensive study to see if the increase was truly necessary.

“Any suggestions from the state need to be relayed to the respective local councils to be discussed,” he said.

He said if there was an increase, there should be proper plans for the extra monies to go towards improving facilities and development.

“The councils must think about how to upgrade the services for the people,” he said.

Meanwhile, Sepang Municipal Council (MPSp) councillor Santokh Singh Gurdev Singh said that a small increment would be reasonable because the assessment review was long overdue.

“To run a local council effectively, the council needs to generate income to provide good service to taxpayers,” he said.

“However, any increment should be studied in detail and not burden the public,” he added.

Meanwhile, Tropicana Petaling Jaya Residents Association president Jean Lip said local councils should look into improving their services first.

“There are still roads that are not repaired properly and many other issues,” she said.

“Most importantly, they should explain to the people the rationale behind the increment. It should not be drastic like what has happened in Kuala Lumpur,” she added.

Ahmad Fahmy Sallehudin, committee member of Jalan Adang Shah Alam Residents Association, said he would not mind paying extra if it was a reasonable sum.

“I think if they give a good justification, it is okay because the rates have not been reviewed for a long time but it must not be a big jump. I have stayed here for 10 years and paid the same amount for my assessment fee,” he said.

“The local councils should give us their assurance that they can improve their service so that we get what we are paying for,” he said.

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9 comments to Assessment study welcomed but increment should be held off

  • martinlts

    If the value of a property increases then the assessment also increases? I always fail to see the logic behind this argument. The assessment is supposed to pay for services provided by the town councils such as garbage collection and hmmm…. what else? (Sewerage treatment, water treatment, are all privatised) Is it more expensive to collect rubbish from a posh neighbourhood compared to a poorer one? Is it more difficult to collect garbage from 100 bungalow lots of 5000sqft each or from 333 terraced houses of 1500sqft each? This is about covering the cost of services rendered. Nothing to do with a property’s value.

  • reo4oreo

    You are so right, martinlts. Defies logic, doesn’t it.

    It’s not like the rubbish collectors will put back the lids of rubbish bins in a posher area compared with in a terrace house. In fact, from my observation, the rubbish are kept nicer with proper refuse bags and properly tied up (orders to the maid, i bet) compared with small shopping bags tied up on trees/gate posts or simply strewn all over the place courtesy of stray cats & dogs & recycle people) in a not so posh area!

    Furthermore, houses in gated communities pay for the rubbish removal, clearing of drains, grass cutting, maintenance, etc; from their own pockets via management fees. Council buta-buta collects assessments…

  • ad2000

    You guys obviously don’t understand what a tax is (you do know why it is called ‘cukai’, don’t you?). The government also taxes your income to pay for services but your tax goes up as your wages go up. Do the services increase with your wages? No but your tax bill goes up anyway. This is the deal we have in this system, the law has been formulated for the council to extract a percentage of the rent chargeable on each property. As rent (which happens to correlate with property price but not always) goes up so should your bill. That is the law, if you don’t like it then go and change the Local Councils Act.

    Is there a better way of determining the bill? Yes, there is. The correct way of doing this is to re-value the rent for all properties to the market rate and then set the percentage taxed so that the council’s costs are covered. Then everyone will be treated equally, instead of what we have right now where owners of new properties are paying rates based on current rent whereas owners of old properties are paying rates based on rent from umpteen years ago.

  • martinlts

    Actually, I dont quite see why we need separate taxes such as assessment, quit rent, etc. Why not just collect one income tax and let it cover everything else? The larger international community thinks that rental rates, rather than property value, is a fairer way to determine assessment rates. But either way, it is presumed that the owner of the property will pay the rates, even though it is rented out. Is it fair? I mean if the property is left empty, there wont be any garbage to collect. If it is rented out, the garbage is generated by the tenants, not the owners. A larger household also tends to generate more waste than a smaller one, regardless of the value/rent of the property. So why not link the assessment to the personal income tax? The Fed govt may collect everything at first but to ensure fairness, the ‘assessment tax’ can be refunded to the states/town councils according to population size.

    But ANYHOW, these are just opinions. Everyone has them. If you disagree, just say your piece. No need to run down others. Superiority, like beauty, is only in the eyes of the beholder.

  • ad2000

    Aiyo, you really should go and research the matter properly before you start talking about it. In the first place the assessment rates are based on RENT, not property prices. If you don’t believe me then have a look at your assessment bill, does it say RM500k, or in your house’s case RM370k which Sime charged? AFAIK, only Johor bases it on property prices.

    Furthermore, who says the international community thinks that rental rates are fairer? The UK uses property prices, except that it uses a 1990 baseline for all properties regardless of age. In the US, local governments also use property prices.

    Collecting money at the federal level? Do you want to end up paying assessment tax to cover the 80% of the working population that pays no tax in the first place? What about those who don’t work at all and don’t have any declarable income? Have you considered why other governments don’t collect this money at the federal level and then disburse it to local governments? Why, for example, does the UK (which has had some 300 years to evolve its system of tax collection) let local councils collect the money?

  • martinlts

    Opps! U r right ad2000. I assumed assessment is based on prop value due to Tengku Adnan’s comments that the rate hike is justified bcoz prop value went up. On my commentary that international comm thinks rental based rates are fairer, I picked that up in a news article that I read a while ago but I couldnt recall where. The author argue that whilst prop value is subject to severe speculation swings, rental rates are based on firmer economic realities. So rental-based rates is more reflective of the ‘real world’.

    No doubt each proposition has its own strength and weaknesses. My idea of paying assessment rates together while filing income tax is to simplify the paying process for those who are paying both income tax and assessment rates. For those who now only pay assessment rates, they have to make the trip to town council offices twice a year (or pay online) anyway so I’m thinking whether they make the trip to MBPJ or LHDN office (or online) would make no difference to them. The collection system can then identify which portion is assessment tax and withold that portion while the rest of the income tax is remitted to the Fed. This method will also encourage those who earn an income but need not pay tax to declare their earnings to LHDN to avoid tax queries when they buy props/cars, which is a good practise. When retirees/non-working ppl pay assessment, they will also need to declare that they have zero income. The act of declaring your income to a formal authority is sometimes enough to push some who are earning income on the quiet but do not declare them under present arrangement to actually report their income.

    Whilst the UK has some 300 years (i take your word for it) to evolve their system, their system may not be the best just because they have had many years to fine tune it. Iron lady Thatcher did some changes (why change?) but her changes were again changed later. The Chinese has been around and formed govts for a few thousand years and they have now settled with Communism. Is that the best form of govt? I dont think so but in a communist country, your opinion and mine dont matter anyway. ;-p

  • ad2000

    What’s a completely different form of government got to do with whether an administrative procedure works better or not? The fact that many other systems collect the same taxes but choose to devolve collection to local governments should tell you something about the effectiveness and efficiency of the policy. Thatcher changed the nature of the tax to be collected, not the method of collection. Her change was not popular precisely because of people like you who complain about everything under the sun that costs you more money regardless of whether it is fairer or not and whether you actually understand what is going on or not. The current council tax in the UK is a hybrid of her poll tax and a floating system to distribute the council’s costs (it assumes that two people live at each property whereas her poll tax used the actual number of adults living at the property to calculate the tax due).

    And if you think you are being hard done by here, the assessment tax in the UK for properties in the cheapest band is close to 1% of the price of the property at this time. Consider what that means for you if you had to pay 1% of the price of your property in taxes every year.

  • martinlts

    ad2000, anyone ever told you it is so difficult to have a civil exchange of opinion with you? Must you pepper all your speeches with personal attacks and generalization? whether you think other’s opinion is good or just plain stupid, that is your opinion. There is another matter to consider, of ethics and civility.

  • ad2000

    You complain about something on the basis of complete lack of understanding on your part, follow up with some inane comment about superiority and now you want to talk about civility? And, frankly speaking, lots of things can be objectively proven as fact, it is not all just a matter of opinion.

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