Thursday, November 21, 2013

DBKL and the proposed rates hike

Like every other property owner in the great metropolis of Kuala Lumpur I, too, have received the dreaded Notice for revision of the Valuation List for the City of Kuala Lumpur.

I believe it is very important to write the objection and send it to DBKL. You should not leave it to the politicians and media to do the work for you.

The reason is that underlying this rate hike exercise is a formal legal and bureaucratic procedure that is likely to be used as a basis for selective exemptions or partial exemptions from the general rate hike, i.e. where a property owner has stated specific and relevant reasons in the objection.

Please note that to ensure that you get a fair review, the objection in writing/bantahan secara bertulis must be underpinned by reasons that fall within any of the 5 categories below.

Local Government Act 1976
142. (1) Any person aggrieved on any of the following grounds:

(a) that any holding for which he is rateable is valued beyond
      its rateable value;
(b) that any holding valued is not rateable;
(c) that any person who, or any holding which, ought to be
      included in the Valuation List is omitted therefrom;
(d) that any holding is valued below its rateable value; or
(e) that any holding or holdings which have been jointly or
     separately valued ought to be valued otherwise,

may make objection in writing to the local authority at any time
not less than fourteen days before the time fixed for the revision
of the Valuation List.

Since neither the Datuk Bandar nor any of his cohorts hold an elective office, property owners do not have much hope against the juggernaut of DBKL.

Kuala Lumpur mayor Datuk Seri Ahmad Phesal Talib has confirmed that from January 1, property owners in the city will have to fork out higher property assessment fees.

In this era of feudalism in Malaysia, all we can do is to prostrate ourselves to the gods of government and appeal for benevolence and beseech these gods to rein in on their abuse of power and corrupt excesses...all in the name of controlling costs so that DBKL will not see the need for any further rate increases in the near future.

Here is's highly relevant analysis and debunking of the purported reasons for the rate hike.

KUALA LUMPUR (Nov 21): So is Kuala Lumpur City Hall’s (DBKL) proposed hike in assessment rates justified? has taken a closer look at DBKL’s accounts from the last five years and find that the city is loaded with reserves, tax income, federal and private funding.
Skimming through past reports, speeches and accounts, it seems that the current proposal to raise assessment by up to 300% is unjustified, as the authority has enough avenues of income generation.
DBKL’s main source of income is assessment which typically makes up 40-60% of its total income. And since 2009, DBKL’s tax revenue steadily increased by 2-4%.
However, last year, when Kuala Lumpur mayor Datuk Ahmad Phesal Talib, announced the city’s 2013 budget, he said income from assessment alone was expected to double to RM880.5mil -- an 8.6% jump from 2012. 
In his speech, he said the hike was due to many upcoming property developments, which would translate into more assessment.
Hence it does not gel with the recent proposed tax hike of 100-300% which sent shock waves to KL folks as rates have remained the same for the past 21 years.
The most damning evidence that DBKL is merely taking the easy way out by taxing ratepayers, come from Ahmad Phesal himself. His 2013 budget speech boasts of its prosperous accounts in 2012:
“Even though there is no increase in assessment tax and rates have not been revised since 1992, tax revenue continues to rise because the number of properties that are taxable has increased as well. Rapid property development has also improved revenue from development charges. Rate hikes of those charges and the change of calculation method had also increase tax revenue.
“On top of that, DBKL managed to recover assessment arrears, raking in another RM100mil into their accounts,” he said.
From 2009 to 2013, DBKL has received plenty of funding federal government to carry out projects under the 9th and 10th Malaysia Plan and also from private sector and sometimes from Petronas.
DBKL hardly ever spends every single cent allocated to the financial year. For instance, development cost in 2011 was budgeted at RM1.017mil, but only RM789.6bil were spent. Hence RM227.4mil was carried forward to the next year.
By merely looking at general accounts of DBKL, cost cutting effort by former mayor Tan Sri Ahmad Fuad Ismail has made the city rather well-off.
In 2010, Ahmad Fuad, who was mayor from 2008 to July 2012, had indicated that while assessment that had not been revised for so long, he would not push for a rate hike. 
In fact, due to DBKL’s financial standing, it could even afford to reduce assessment tax by 2% for service apartments and apartments in commercial buildings, sustaining a shortfall of RM4 mil in revenue. 
To maintain the city’s revenue, there were special task forces established to collect arrears, amounting to RM4 million especially by low cost apartment dwellers.
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