January 10, 2018
IF we are to truly tackle the issues related to the cost of living, we need to know the root cause. One of the main causes, as elaborated in Part 1 of this 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 nine per cent of the iceberg is visible while 91 per cent is hidden below the surface.
Other factors like the Goods and Services Tax are often spun by the opposition as the main factor causing the increase in the cost of living; if so, it may just well be the tip of the iceberg, but not nearly as much as the real culprit and the bulk of the problem hidden below the surface, which is, property-related taxes by the state government.
A significant increase in the cost of living actually happened 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 petrol price at the pump was reduced six times within four months from August 2008 to 2009 and stable at below and about RM2 per 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 onwards. In fact, the price of steel, one of the biggest components in construction, dropped to half the price at below RM2,000 per tonne in 2009 from around RM4,000 per tonne in 2008.
Since they took over the state government in 2008, the Pakatan government in Selangor has increased the fees for 90 types of business licences in Selangor. The fee for a new business licence in Selangor has increased by as much as 300 per cent.
Business licence fees under the Shah Alam City Council were raised by as much as 72 per cent, and under Petaling Jaya City Council by as much as 120 per cent. Klang Municipal Council and Ampang Jaya Municipal Council have also raised their business licence fees recently.
A case in point, a new licence fee for a used car dealership under Pakatan’s Kajang Municipal Council was increased by 282 per cent to RM1,490 from the RM390 during Barisan Nasional’s time.
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 folks’ homes, homes for the disabled, and nurseries.
Penang Real Estate and Housing Developers’ Association (REHDA) chairman Datuk Toh Chin Leong said that the cost of doing business has gone up because of the hike in compliance costs imposed by the state government.
Small and petty traders also feel the brunt of escalating costs as the local governments in Selangor and Penang increased business fees. According to Penang state representative Datuk Muhammad Farid Saad, contribution fees per stall at some places in Penang were increased from about RM3,000 (before 2008) to between RM35,000 and RM58,000 now.
When a trader pays a high rental for his business premises, he will transfer the cost to the consumers in terms of higher prices of goods and services. This is why a bottle of mineral water costs less at sidewalk stalls than in grocery stores or supermarkets.
According to Price Catcher, the mobile application introduced by the Domestic Trade, Cooperatives and Consumerism Ministry to monitor the prices of goods, there are price differences among the states too. For example, a kilogramme of onion on average sells for RM4.70 in Selangor whereas in other states, including Kuala Lumpur, it is RM4.15.
Basic amenities were also not spared. Parking contribution in some areas in Penang, which was previously at RM15,000 per bay before 2008, was increased to RM25,000 per bay now.
Since Pakatan took over Selangor and Penang, business growth has been sluggish. Menteri 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. His policy and the Pakatan government’s policy have increased the cost of doing business and the cost of living of Selangor folks; this in turn causes the slow economy.
In recent years, the Selangor state government has increased the salary of the menteri besar and the Pakatan state executive committee members. The Selangor menteri besar’s salary now is the highest public servant salary 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 now. It has the highest number of water supply disruptions compared with all other states combined, the highest number of death by communicable diseases like dengue, the highest number of vice premises, and the list goes on. And now, to add to the list, one of the highest in the cost of living in the country. And, the above rates 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, the Pakatan-led Selangor government has gone overboard with this, as is evident by the facts in this article.
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 retakes Selangor in the coming general election, we will lower property-related taxes for lower home prices and lower cost of doing business, lower prices of goods and services, hence, an overall lower cost of living and a better life in Selangor for all.