Promise to lower property taxes

IF we are to tackle the cost of living problem, we need to know its cause. One of the main causes as elaborated in my article yesterday is the increase in property-related taxes.

Property-related taxes are akin to "the iceberg below the surface" of the cost of living problem. Only 9% of an iceberg is visible while 91% of it is hidden below the surface.

Other factors like GST are often spun by the opposition as the main reason causing the increase in cost of living. If so, it may just be the tip of the iceberg, but not nearly as much as the real culprit hidden below the surface, which is property-related taxes imposed by the state government.

A significant increase in cost of living was recorded between 2008 and 2011 in Selangor and Penang. This corresponds with the increase in property prices particularly in these states. Back then, there was no GST. This significant increase could not have been due to the increase in oil prices, because the petrol price at pump was reduced six times within four months from August 2008 to 2009 and was stable at below and about RM2 a litre for years afterward.

It couldn't also be due to the cost of building materials since the price of construction materials has been stable from 2009. In fact, the price of steel, one of the biggest components in construction, dropped from around RM4,000 a tonne in 2008 to half the price at below RM2,000 a tonne in 2009.

Since Pakatan took over Selangor in 2008, the state government has increased the fees for 90 types of business licences. The fee for a new business licence in Selangor has increased by as much as 300%.

Business licence fees under the Shah Alam City Council were raised by as much as 72%, and under the Petaling Jaya City Council by as much as 120%. Klang Municipal Council and Ampang Jaya Municipal Council have also raised their business licence fees.

A case in point, the new licence fee for a used car dealership under Pakatan's Kajang Municipal Council was increased by 282%, from RM390 during Barisan Nasional's time to RM1,490 after Pakatan took over.

The Pakatan local governments have also charged fees on 32 types of business premises which previously were exempted under the Barisan Nasional government. They have also increased assessment rates on old folk's homes, homes for the disabled and nurseries.

Penang Real Estate and Housing Developers' Association chairman Datuk Toh Chin Leong said that the cost of doing business has gone up because of the increase in compliance costs imposed by the state government.

Small and petty traders also feel the brunt of escalating compliance costs as the local governments in Selangor and Penang increased business fees.

According to a Penang state representative Datuk Muhammad Farid Saad, contribution fees for each stall at some places in Penang were increased from about RM3,000 a stall before 2008 to about RM35,000 to RM58,000 a stall now.

When traders pay high rents for their business premises, the traders will transfer the cost to the consumers in terms of higher prices of goods and services.

This is why the price of a bottle of mineral water is cheaper at sidewalk stalls than in grocery stores or supermarkets.

According to Price Catcher under the Ministry of Domestic Trade, Co-Operatives and Consumerism, there are price differences among the states too. For example, a kilogram of onion on average sells for RM4.70 in Selangor whereas in other states including Kuala Lumpur the average price is RM4.15.

Basic amenities were also not spared. Parking contributions in some areas in Penang, which were previously at RM15,000 a bay before 2008, were increased to RM25,000 a bay. Since Pakatan took over Selangor and Penang, business growth has been sluggish.

Mentri Besar Datuk Seri Azmin Ali blamed the "slow economy" for the reduction in forecast revenue from land premiums, quit rent and land-related business charges. What he doesn't understand is that his policy of raising property taxes is the main cause of the slow economy in Selangor in the first place.

The Pakatan government's policy has increased the cost of doing business and the cost of living in Selangor; this in turn causes the slow economy.

In recent years, the Selangor state government has increased the salary for the mentri besar and the Pakatan state executive committee members. The Selangor mentri besar's salary is the highest among public servants in the country, higher than the salary of the prime minister.

Effectively, Pakatan politicians have increased the tax burden on the people and raised their own salaries.

Selangor has many problems. It has the highest number of water supply disruptions in Malaysia compared to all other states combined, the highest number of deaths caused by communicable diseases like dengue, the highest number of vice premises, and so on.

And now to add to the list, one of the highest cost of living in the country. And the rates above are not just because there are many people living in Selangor, they are the highest even on a per resident basis.

Benjamin Franklin once said, "In this world nothing is certain except death and taxes". But Pakatan's Selangor government has gone overboard with this as evident by the above.

This is a real and urgent problem. We need to fix it. I am a Selangorean. This is my state. I want to make it better.

When Barisan Nasional wins Selangor in the coming general election, we will lower property-related taxes in Selangor for cheaper house prices and lower cost of doing business, lower prices of goods and services, hence overall lower cost of living and a better life in Selangor for all.

The writer, Isham Jalil, a Harvard and Wharton-trained political economist from Paya Jaras, Selangor, is the special officer to the prime minister. He is also the president of Sukarelawan Malaysia. Comments: letters@thesundaily.com