Kuala Lumpur moves to raise tax revenue

Malaysia's capital, Kuala Lumpur, is facing a tax increase this year, according to news outlet The Star.

Any change in the city would be implemented in phases, likely starting with industrial tax rates, according to Zaliha Mustafa, minister in the prime minister's department in charge of federal territories.

Discussions on the matter began in early July last year, Zaliha said, emphasizing the need to revisit taxation to address rising costs and boost revenue.

"We are reviewing all types of taxes, not just assessment taxes but also quit rent, and have been collaborating with the finance departments of various agencies to study the matter comprehensively," she said.

Zaliha said Kuala Lumpur City Hall, or DBKL, had been running a deficit in recent years, necessitating efforts to increase revenue.

When asked about a time line, Zaliha said she could not yet say but emphasized that the hike was inevitable.

"If it happens, it will be done in phases," she said.

"We cannot rely solely on the federal government for funding.

"For instance, road repair costs exceeded 100 million ringgit ($22 million), while the federal government's contribution under Marris (Malaysian Road Records Information System) is only 36 million ringgit."

Zaliha also highlighted rising costs in other areas including waste management and public housing maintenance.

"We have received requests from landfill operators to increase tipping fees due to rising costs," she said.

"Public housing maintenance is also becoming more expensive, with lift upgrades and other needs.

"We must consider all aspects before increasing revenue, but the rates will not necessarily be uniform," she said on the sidelines of a program at DBKL headquarters last month.

DBKL had announced a review of assessment rates at the end of 2013 — the first in 21 years.

Kuala Lumpur is not the first to decide to increase assessment taxes in Malaysia.

Despite objections from ratepayers, the government of Selangor state on the west coast of Peninsular Malaysia has approved a 25 percent increase in assessment rates in all local councils this year.

Speaking to the media on Dec 9, Selangor local government and tourism committee chairman Ng Suee Lim said the new assessment rates by 12 local councils will come into force on Jan 1, 2025.

In June 2014, then federal territories minister Tengku Adnan bin Tengku Mansor announced that the hike would be capped at 10 percent for residential properties and 2 percent for commercial premises.

The state government explained that the revaluation exercise and subsequent increase were necessary as property charges had remained unchanged for 20 to 40 years.

In Malaysia, local authorities are permitted to review and revise assessment rates every five years, as stipulated under Local Government Act 1976.

THE STAR, MALAYSIA