SHAH ALAM 28th AUGUST: The Federal Government’s proposal to increase the Real Property Gain Tax (RPGT) rate during the Budget 2014 delivery this coming October 25th will not solve the problem of increased housing prices.
The People’s Coalition Party (PKR) Strategy Director, Rafizi Ramli, said the Federal Government should approach the high pricing predicament holistically, instead of resorting to short-term solutions.
“Despite concentrated effort to reintroduce and increase RPGT that can help reduce wanton speculations, however the fact remains that the root cause was still BN government’s frenetic endeavour that overlooked the underprivileged when they abolished the RPGT,” said Rafizi.
Previously, the Minister of Urban Well-being, Housing and Local Government (MHLG), Dato’ Abdul Rahman Dahlan, said the current RPGT rate fails to curb property speculations, compelling the government to make an intervention in order to resolve the problems .
Rafizi argued that factors, such as property taxes and speculations in home pricings, are not to be blamed for the increase in housing prices.
Amongst the many approaches proposed by Rafizi is to eliminate corruption that is causing serious complications in the construction sector.
“The government must be committed to combating corruption that is actively happening in housing projects, which contributes to the rise in housing prices,” said Rafizi.
Prior to the year 2007, the government determined that properties which were to be sold within two years after purchase must pay RPGT amounting up to 30 percent. Twenty percent if it was sold within four years, five percent in the fifth year, and no tax to be applied after six years.
However, beginning from April 2007 to January 2010, all profits from property transactions were exempted from RPGT as a step to increase property sales during the economic downturn.
It was reintroduced in Budget 2011, where acquisitions from real estate sales for less than five years will be charged with RPGT for about five percent.
During Budget 2012, proceeds from property sales of less than two years will be charged with 10 percent RPGT; five percent for between two to five years, while no RPGT wil be imposed on five years.
