Ever since Dewan Bandaraya Kuala Lumpur (DBKL) announced the higher assessment value, many commentaries have been made and some appear to be intentionally deceitful. I have also written fairly extensively on why it is not justified.
A. DBKL's total expenditure and revenue
With DBKL having just announced a reduced assessment RATE, and sticking to higher assessment VALUE previously decided, what is the bottomline effect for you? In other words, how much more do you pay in actual assessment TAX?
I hope this article will help provide further clarity for you.
2013 Budget figures*
Total Revenue RM1,690.00 mil
Total Expenditure RM2,190.00 mil
- Operational RM1,406.00 mil
- Development RM 782.55 mil
Source : DBKL Budget Speech 2013
B. Total Assessment Tax Collections (Before and After Revision)
The estimated revised assessment tax collections amount to RM1,430 mil compared to RM880mil currently. This represents an increase of 62.5% or RM550mil more. DBKL should disclose the exact figures, but we believe our estimations are reasonable.
C. The Assessment Rate
Revised Assessment Rate
| |||
Property Type
|
Within 36 miles radius
|
% of reduction
| |
2013
|
2014
| ||
Commercial
|
12%
|
10%
|
16.7
|
Service Apartment
|
10%
|
7%
|
30.0
|
Residential
|
6%
|
4%
|
33.3
|
Low cost flat
|
6%
|
2%
|
67.7
|
Vacant commercial land
|
10%
|
7%
|
30.0
|
Vacant residential land
|
7%
|
5%
|
28.6
|
Kampung Baru, Kampung
|
2%
|
1%
|
50.0
|
Sungai Penchala & Kampung
| |||
Melayu Segambut Dalam
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What is the basis for the different percentage of reduction of the assessment rate for the various property types and locations? If the intention is social inclusion to assist the lower income group, it would have been easier to give a further discount to the assessment rate base on income reported on tax returns. A billionaire who lives in a designated area with low assessment rate pays low assessment tax even if he has a palatial home.
D. How does the new assessment rules affect you?
Whether you pay more or less depends on the relative changes to your assessment value and your assessment rate, as per the formula above. In general, most people will pay a higher assessment tax as the rise in assessment value is greater than the fall in assessment rate.
With DBKL getting RM500m to RM600m more, who pays?
Is this pain fairly spread out?
E. Illustrations of the above and its effect based on 3 scenarios on a residential property
F. Conclusion
To address the unhappiness of Kuala Lumpur residents, we hope DBKL will provide further clarity and transparency on the following questions :-
a) How much more assessment tax revenue will DBKL get after the revised assessment value and rates? How will this additional collections, which we estimate at over RM500 million, be spent? Tax payers have the right to demand accountability and responsibility. As I have written in previous articles on this issue, DBKL is already spending more than other municipalities per person.
b) What is the basis of computing assessment value? I know it is rental income (implied or actual) but what are the reliable sources of information or database used? DBKL should make the entire list of assessment values for all properties in KL available on the Internet. This will allow every resident the ability to check their assessment value against all others, in the interest of fairness and transparency.