An evaluation of property tax system in Malaysia

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1.0 Introduction

Rapid population growth and increasing urbanization have triggers increases in demand for real property. These developments ultimate translate to the responsibility of local authority in providing facilities for the public. Therefore, local government need some sources to provide these facilities. Basically local government income comes from taxes, fees and fines. Property taxes are the largest fund and backbone of municipal finance which is used to provide amenities and services. However not all land parcels and buildings can be taxed. There are some taxable properties which are exempted by law such as non profit religious, health, education and /or social activities; wildlife reserves and forests and other protected areas; cemeteries; those related to the functioning of certain international organisation; and those related to official foreign diplomatic presence (Lewis, 2003).

Property tax is an ad valorem levy on the value of property which the owner is required to pay. In Malaysia, the assessment rates are charged according to the provision of Local Government Act 1976. This provision empowers the local authority to collect assessment rates according to the area of jurisdiction. The property tax is based on market value for the state of Johor and annual value for the rest of states in Malaysia. Most of the appraisals in Malaysia are using conventional system to evaluate the property tax. The valuation or revaluation of the property is still carried out by manual approach. This manual approach is the main reason for inefficiency and unsystematic in local government’s property tax administration. Hence, only few local authorities in Malaysia carry out valuation using computer but this valuation done man...

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...x. Literature review will also help the researcher to identify the general elements, components, functions and features of the CAMA Systems.

Secondly, questionnaire survey with the prospective appraisals will be carried out at the selected local authorities to reveal the problem faced in property tax administration processes and procedures, the data and information required to be made available in the system, report format, user interfaces, user and management functions etc.

Finally, quantitative analysis will be used to analyse the responses from the users to evaluate the strength, weakness, opportunity and threat in administrating the property tax in Malaysia; the efficiency of the CAMA system and whether it has fulfilled their administration requirements. Proposals to further enhance the CAMA System will be outlined for further research in the future.

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