Ismail (centre) speaking to Rumaizi (left) about the proposed assessment tax hike. Ipoh City Council held a programme to provide clarity on the property valuation exercise and revised assessment at Stadium Indera Mulia. — Photos: RONNIE CHIN/The Star
THERE is growing opposition to the proposed assessment tax increase by Ipoh City Council (MBI) which is set to take effect from next June.
City residents, particularly retirees and business owners, are complaining that the increase is too drastic and not justified by the level of services received.
In October, the city council sent letters to property owners announcing new assessment tax rates based on a property valuation exercise conducted in the second quarter of the year.
The last such valuation exercise was carried out 42 years ago.
According to the notice, rates for homes and vacant land in traditional villages have gone from 5.5% to 6.6%, down to 4%, while those for properties in new villages and Rancangan Perkampungan Tersusun (RPT, or structured village planning) have also dropped, from 8.5%-9.5% to 6% (see table).
For housing areas, the rate has been reduced to 9% from 16.5%, while strata-titled properties have seen a drop from 10.5% to 9%.
Commercial properties now face a rate of 9%, down from 16.5%, and industrial properties or vacant lands are at 9.5%, reduced from 16% to 16.5%.
Despite the lower rates, residents and business owners are dismayed by the sharp rise in assessment payments due to the significant increase in property values.
Some main roads in Ipoh are dotted potholes, like this one in Jalan Tambun. Residents want better service from the city council before assessment taxes are increased.
Burden for retirees
Retired manager Ismail Labu, 68, said many retirees and senior citizens without a source of income would find the new taxes burdensome.
Ismail, who lives in Tasek, noted that although his assessment taxes are set to rise by less than RM100, the increase is still excessive.
“I do not feel that the increase is justified. The city council services in my area are poor.
“There are potholes that have not been fixed for a long time,” he said when met during a programme held by the city council to provide clarity on the property valuation exercise and revised assessment at Stadium Indera Mulia.
Ismail also pointed out issues with clogged drains and MBI’s unfulfilled promise to provide free rubbish bins.
He said many residents were puzzled as to why their assessment taxes had increased despite the drop in tax rates.
Jothinathan says rate hike is okay if the services provided are good.“The people here mostly buy properties to live in, not as investments. So how do they value our properties?” Ismail asked.
“I don’t think it is fair to base increases solely on new property valuations. Some homes cannot even be rented out for RM800,” he added.
Former civil servant K. Jothinathan from Ipoh Garden East, echoed these concerns.
“My existing assessment is about RM200, but it has been revised to RM400. If the services provided by the council were good, this would be fine.
“However, in my area, the drains are clogged and filled with rubbish, and complaints go unattended. I don’t think the increase is justifiable,” the 69-year-old said.
Concerns among businesses
Koh: Businesses already burdened with having to comply with new procedures and regulations.Commercial property owners and businesses argue that they will be severely impacted by the increase.
Perak Chinese Hardware Association president Datuk Eric Koh said the valuation of several of his industrial and commercial properties had more than doubled.
For instance, one industrial property rose in value from RM61,000 to RM290,000.
“The previous assessment tax was about RM9,000, but the new amount is RM26,000.
“The gap is too big,” he told StarMetro.
Although the city council has capped the increase at 20% through a subsidy, Koh expressed concern that it, like the Federal Government diesel subsidy, could be revoked at any time.
Ipoh mayor Datuk Rumaizi Baharin had previously said that MBI was introducing a capping mechanism or subsidy to soften the financial blow for the people.
He said the subsidy for residential properties would be capped at 15%, for commercial properties at 18%, factories at 20% and empty lands at 25%.
“This subsidy will be implemented until June 30, 2028. We will discuss if this can be continued later on,” Rumaizi had said.
Koh said most businesses would not mind a small increase in assessment taxes, but the current hike was too steep.
A 10% increase would be more reasonable, he added.
Tanah Hitam New Village in Ipoh has a sizeable population of senior folk and retirees. They say even a slight increase in assessment tax will be a burden to those with no income.
Koh also complained that businesses were already burdened with having to comply with new procedures and regulations such as e-invoicing, minimum wage and licensing fees.
“How does the government expect us to sustain our operations when there are so many things to pay for?
Leong wants transparency for MBI’s subsidy mechanism.“If more businesses close shop, it will impact the country’s gross domestic product and taxes,” he added.
Malaysian International Chamber of Commerce and Industry Perak executive committee member Leong Hua Kooi criticised the lack of transparency regarding the city council’s subsidy mechanism.
“We do not know what will happen in the future. It could be withdrawn at any time, which would increase our cost of doing business,” he said.
Leong called for a gradual increase in the assessment taxes instead, rather than a drastic spike.
“I hope the city council and state government will consider other costs that businesses have to pay,” he added.
Housing and Local Government Minister Nga Kor Ming had also weighed in on the issue, suggesting that any review of assessment rates should consider the current inflation rate and be implemented gradually.
During a tree-planting ceremony at Taman Polo in Ipoh last Sunday, he said, “The government recommends any tax increase be gradual, such as a rise of only 2% to 5% every two years, to avoid burdening the public.”
Questions on valuation
Ng is questioning the methodology of the property valuation exercise.Ipoh City Watch president Dr Richard Ng questioned the methodology of the property valuation exercise, arguing that different areas had varying market conditions that affected rental values.
“Did the city council rely on property websites or agents for estimates? Older housing estates should not be assessed at the same rate as new developments with better amenities,” he said.
Ng, a former city councillor, also compared Ipoh’s assessment rate (9%) with Shah Alam’s lower rate of 5%, pointing out that the Selangor capital city has higher property prices and rents.
Ng also called for greater accountability, asking how MBI planned to use the estimated RM20mil to RM30mil increase in annual revenue.
“The city council currently collects about RM143mil in assessment every year.
“When assessment taxes go up, ratepayers expect better services, infrastructure and amenities.
“Will the additional amount collected go to maintenance or building of more facilities? Ratepayers have a right to know,” he said.
Ng also said that other than assessment taxes, the city council generated revenue from licence and planning permit fees.
“MBI needs to come up with new strategies or initiatives to expand their coffers,” he added.
City council’s side
When met at the MBI programme at Stadium Indera Mulia, Rumaizi defended the new valuations, stating that property values and rental rates in Ipoh had risen sharply since 1982, when the last valuation exercise was conducted.
“The new valuation reflects the current market value of properties and provides taxpayers with an updated basis for their assessment.
“This is a standard practice in states like Johor, Selangor and Penang,” he said, adding that such valuation exercises were conducted every five years.
Rumaizi said the new valuation list was approved by Perak government in September.
He said there were currently more than 318,000 property owners in Ipoh and the city council was expected to make a decision regarding the proposed increase in property assessment tax in May 2025.
“There may still be some folk or property owners who do not fully understand the valuation exercise.
“The existing valuation list does not reflect the current market value and is far behind.
“By adopting the new valuation, it will give taxpayers a more accurate picture of the current value of their properties, which would be the basis for calculating the new assessment tax,” said the mayor.
“The new valuation list also allows the city council to review and restructure the tax rates imposed on all properties so that they are updated and current.”
To address public concerns, Rumaizi said MBI would hold sessions to explain the valuations and allow property owners to review and object to their assessments.
“Objection meetings will take place in phases, with the first at the end of 2024 and the second in 2025.
“Property owners can also review their valuations at MBI headquarters until December,” he added.
