Klang Municipal Council mulls tax on high-end property

The Klang Municipal Council (MPK) is mulling over plans for a tax on bungalows while reducing the assessment rate on middle and low-cost housing, China Press reports today.

It said the suggestion was made when MPK councillors and officials met to discuss the 2012 budget, to curb property speculation in the municipality.

The attendees also asked the council to emulate MBPJ in reducing the assessment rate on middle and low-cost housing, since the council broke even recently.

According to the paper, MPK will include these suggestions into its 2012 draft budget and submit it to the state government in September for its consideration.

If the idea is accepted, MPK will be the first local authority in the country to impose such a ‘luxury’ tax.

Councillor Lim Lip Suan told China Press that MPK currently charges an assessment rate of between 5 and 9.5 percent, depending on the market value of the property.

A bungalow is usually assessed at a rate of RM500 a year, and middle and low-cost housing at RM180.

However, developers remain skeptical over the effectiveness of the proposed by-law.

Developer Seow Cho Thoy told China Press the move will not curb property speculation, noting that the cost of building materials and workers ‘salaries has risen, contributing to the appreciation of property values.

“Those who can afford a bungalow would not mind paying extra tax, so such a tax is unlikely to affect the sales of luxury properties,” he added.