Selangor, Penang tax hike woes

In November 2010, the Pakatan state government in Selangor introduced its Development Charge Rules, which imposed a 20-30% charge on all property developments including for housing and commercial property. This has increased the cost and price of new housing projects. In Kuala Lumpur, property taxes are no doubt high too.

However, Kuala Lumpur is a small area compared to other states like Selangor, and most people who work in Kuala Lumpur live in Selangor. Evidently, during the day, the population in Kuala Lumpur is around 3 million but drops to about 1 million after office hours. In Shah Alam and Subang in Selangor, the Pakatan government had increased assessment rates 10-fold over several years for dwellings in Kampung Baru Sungai Buloh and Kampung Baru Subang collected by the Shah Alam Municipal Council. A case in point, a resident who paid assessment of RM1,470 in 2011 was asked to pay RM23,040 in 2013.

In Penang, the development charge which was previously RM5 per sq ft for residential units and RM7 per sq ft for commercial units before 2008, tripled to RM15 per sq ft and RM21 per sq ft respectively after 2008.

Drainage contribution fee, which was RM10,000 per acre during Barisan Nasional’s time, was increased to RM50,000 per acre by the Pakatan government. These charges add up to the price of houses in Penang and are passed on to buyers.

The significant increase in property tax revenues collected by the Selangor and Penang state governments come out of the pockets of the people of Selangor and Penang who are taxed 10 to 20 times higher now compared to during Barisan Nasional’s time.

The rise in property-related taxes has created a domino effect on the cost of living in Selangor and Penang. It has increased the cost of houses and business premises, and in turn increased the cost of goods and services, and reduced the net disposable income of the people of Selangor and Penang. We need to do something about this.

Isham’s next article appears tomorrow.