Tax periods in Selangor with valuation hike? Not really, because the increase is capped and exemptions are provided for social housing.

KUALA LUMPUR, Dec 16 — After nearly three decades of inactivity, Selangor’s tax rates are finally getting a review, prompting raised eyebrows and sighs from those anticipating a tightening of the cords of the stock market.

But first, let’s dig deeper into this long-awaited rate hike. Is this tax review really the financial specter that is presented to it?

To recall, the Selangor government recently approved a 25 per cent increase in assessment taxes, which is expected to come into effect from Jan 1 next year in all local councils.

Previously, an increase of more than 100 percent had been proposed and only some local councils were going to implement it.

Several public sessions were held to explain the proposed tax increase and gauge taxpayer opinions.

Following these sessions, the state government announced a 75 percent reduction in the proposed tax increase.

State executive councilor for local government and tourism Datuk Ng Suee Lim explained that this adjustment follows a mandatory review as outlined in the Local Government Act 1976 (Act 171), which requires all local councils to prepare and publish a new assessment list every five years.

However, as we look at the numbers, this tax adjustment appears less like a systemic shock and more like a measured recalibration.

To recall, all municipalities in Selangor have gone decades without reassessing their property tax rates.

This long-standing stagnation in tax policy extends to a significant portion of the state.

See the list below:

This extended period without rate adjustments raises questions about the adequacy of local government funding and the potential impact of a sudden update to these long-unchanged rates.

The calculations

Considering the period of approximately 30 years since the last revision, the annual increase from 2025 is very minimal.

Here is an example of how much a two-story house owner would have to pay in 2025 in Shah Alam:

This means the local council has capped the tax increase at RM360, which is the 25 per cent limit of RM72 from the 2006 tax amount of RM288.

If increased revenue leads to improved services, taxpayers could get more bang for their buck, potentially offsetting the absolute increase.

This balance between cost and quality of service is crucial to understanding the full impact of the review.

Low-cost houses, including SelangorKu house owners, will be exempt from the increases, at a cost of almost RM60 million to the Selangor state government.

Ng announced that targeted exemptions would be given to traditional village houses.

This year alone, 2,849 households benefited from these exemptions.

National news agency Bernama reported Ng as saying the state government was considering extending these exemptions to 5,000 traditional houses, provided they met specified conditions.

Why is the assessment tax increase more noticeable for certain properties?

Several factors contribute to this, including changes in land category from vacant to development status, changes in land use category, addition of structures, and other factors.

“Previous governments did not take the necessary steps to increase the rates gradually, so when it comes to a general review and it is done suddenly, of course people will not be happy about it and will be frustrated.

“In Shah Alam for example, the increase is capped at 25 percent, but the Shah Alam municipal council has reduced this to 22 percent.

“The increase for 2025 is 3.25 percent for houses, 6.75 percent for commercial properties, 7 percent for industrial properties and 1 percent for empty land intended for agriculture ” said Shah Alam Municipal Council Councilor Muhammad Shakir Ameer Mohideen. Malaysian Mail.

Shah Alam Municipal Council’s previous rates were 4 percent for residential properties, 7 percent for commercial properties and 7.5 percent for industrial properties.

“The repercussions will not be as great as feared.

“This is marginal and is being done in the interest of the people to improve the quality of local council services and modernize infrastructure,” Shakir added.

Similarly, the Kuala Langat City Council reduced its tax rates to 3 per cent for residential properties and 4 per cent for commercial properties, from 5.5 per cent and 14 per cent respectively.

Before the decision to implement a flat assessment tax rate of 25 percent in all local councils, the Kajang Municipal Council had conducted a property valuation exercise and proposed a 20 to 30 percent increase in the tax rating based on 2020 ratings. This will be the first review of Kajang since 1985.

To mitigate the impact, the proposed increase was initially to be implemented gradually.

Taxpayers would pay 50 percent of the new rate this year, with the full amount taking effect in 2025. The star reported.

Previously, residential properties were taxed at different rates: 5.5 percent, 7.7 percent and 8.8 percent, depending on the property type.

The new tax structure simplifies the situation by introducing a uniform rate of 4 percent for all residential properties.

Selangor Newspaper Subang Jaya MP Michelle Ng previously reported saying local authorities in Selangor had also been asked to prepare a comprehensive report outlining their plans to improve public facilities and service delivery once the new tax rates will come into force in January next year.

She stressed the importance of keeping citizens informed of the improvements that will follow the tax increase.