'Surprise' property tax hike in KL after 20 years

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For the first time in two decades, Kuala Lumpur City Hall is raising property taxes in the capital city and surrounding districts, at a time when city dwellers are already complaining about the rising cost of living.

The hike ranges from 10per cent to more than 200per cent, opposition MPs said on Wednesday at a press conference in the lobby of Parliament to highlight the issue.

However, because Malaysian property taxes are relatively low to begin with, the rise is unlikely to be big enough to deter foreign buyers such as Singaporeans.

The increase, which was not officially announced, kicks in next year. It will be the first time in 21 years that KL City Hall - known by its Malay name, Dewan Bandaraya Kuala Lumpur or DBKL - is raising property taxes. The additional revenue, officials said, will be ploughed back into improving infrastructure such as repairing roads.

Journalism lecturer Susan Tam, 35, said the hike came out of the blue. "What surprised me was that this letter from DBKL said I have only one month to write in my objections, but there was no announcement that this was coming," she said. The new tax for her condo in Taman Tun, an upper middle class residential area, is 19per cent higher at 1,368 ringgit (US$425) a year.

A caller to Bernama Radio on Wednesday complained that the property tax on his home had doubled to 1,800 ringgit ($560) a year. He did not say where he lived, but said it would add to inflation as the "prices of everything have been going up and up".

Opposition MP Tan Kok Wai said the owner of a "low-cost home" in Taman Orkid Desa in his Cheras constituency had received a letter stating a tax jump of 267per cent.

DBKL, whose head is appointed by the federal government, is in charge of municipal matters in the Federal Territory of Kuala Lumpur, home to five million people, or 17 per cent of the Malaysian population.

The KL federal territory has 11 parliamentary constituencies, nine of which were won in May's election by the opposition Pakatan Rakyat alliance. So far, the government has not raised property taxes in any other areas except Kuala Lumpur.

The property tax hike comes at a time when many Malaysians are struggling with rising prices - from the price of their favourite nasi lemak lunch, to groceries. Officially, inflation was under 2 per cent in the first nine months of the year, but many say that does not reflect reality.

Two weeks ago, the government announced it would implement a 6 per cent goods and services tax in 2015. Earlier, it removed subsidies for sugar.

In September, the Najib administration raised the price of petrol by 20 sen ($0.06) or 10.5 per cent to 2.10 ringgit ($0.65) a litre.

Asked about the new property taxes, Federal Territories Minister Tengku Adnan Tengku Mansor said it was to match the surge in KL property prices. "If a house used to cost 80,000 ringgit, but is now worth 700,000 ringgit, but the rate is still low, what are we going to do?" he told reporters on Wednesday. "That is what we want to balance. When we've balanced it, they will receive the appropriate rate."

Seven KL opposition MPs who met the media in Parliament on Wednesday said there was no warning from DBKL about the tax hike. They said it was also unfair to have different percentage rises for different properties, and wanted to know what criteria were used to set the rates. "We admit that from time to time, the rates should be re-evaluated. But it should be reasonable and fair for all quarters," said MP Tan Seng Giaw.