RATES COLLECTION IN MANJUNG MUNICIPAL COUNCIL
LEE HAN WEI
A project report submitted in partial fulfillment of the
requirements for the award of the degree of
Master of Science (Real Estae)
Faculty of Geoinformation Science and Engineering
Universiti Teknologi Malaysia
JULY, 2009
iii
DEDICATION
DEDICATED TO:
DAD, LEE KING HONG
MOM, CHUA AH NGOON
BROTHERS, YI ZHENG AND YI HENG
AND CHONG KA FUNG
iv
ACKNOWLEDGEMENT
This paper is successfully completed with the assistance and supports of my
honorable project supervisor, Dr. Ahmad Arrifian bin Bujang.
Therefore, I would like to take this opportunity to express my heartfelt gratitude
to him for his continuous support and guidance throughout the process of making until
the completion of this dissertation. His enthusiasm has been a great source of inspiration
to me and it is indeed fortunate to be under his supervision and guidance. His dedication
will always be remembered.
On the other hand, I am indeed thankful to those who have shown their full
support to the making of this dissertation especially my family members and friends for
their moral support throughout the process. Greatest thanks to Miss Tun Afza bt Abdul
Manap from Assessment Department of Manjung Municipal Council for her invaluable
help while the writer was carrying out the research work.
Finally, I wish to thank all parties who have given their cooperation and support
directly or indirectly to ensure a successful completion of the project report.
v
ABSTRACT
The aim of this study is to examine rates collection in Manjung Municipal
Council. Local authorities in Malaysia have been given wide powers within the Local
Government Act of 1976.
The functions are not only mandatory functions but
discretionary functions as well. Assessment rates is collected by the local authorities for
the provision of services to the residents. Previous study shows that assessment rates
have been the most lucrative source of revenue of local authority. However, the main
income of local authority to provide services and development in the area is affected by
the increase of rates arrears by house owners. In Manjung Municipal Council, the rates
arrear at the end of year 2008 is RM 3.7 Million. Therefore a study is conducted to
identify the problem of rates collection faced by Manjung Municipal Council. In the
study, 100 questionnaires were distributed to respondents in Manjung council area.
Besides, ways to improve the rates collection was indentified through interview with
officer in Valuation Department in Manjung Municipal Council. As a conclusion, the
objectives of this study have achieved which eight factors that influenced the rates
collection and five ways to improve rates collection system and increase income of
Manjung Municipal Council has been identified. From this study, the ways identified
that can help local authority to overcome rates arrear problem and enhance the rates
collection system are improve the way of rates collection, law enforcement, verify the
address of owner of property, improve the services provided to public and improve the
way to send bills and notices.
vi
ABSTRAK
Tujuan kajian ini adalah menkaji kutipan cukai pintu di Majlis Perbandaran
Manjung. Pihak berkuasa tempatan di Malaysia telah diberikan kuasa yang luas dalam
Akta Kerajaan Tempatan 1976.
Fungsi yang terlibat bukan hanya fungsi-fungsi
mandatori tetapi juga fungsi-fungsi budi bicara. Cukai taksiran yang dikutip oleh pihak
berkuasa tempatan adalah untuk peruntukan perkhidmatan bagi penduduk-penduduk
tempatan.
Kajian lepas menunjukkan cukai taksiran merupakan sumber hasil yang
paling menguntungkan bagi sesebuah pihak berkuasa tempatan.
Bagaimanapun,
pendapatan utama bagi pihak berkuasa tempatan untuk menyediakan perkhidmatan dan
pembangunan dalam kawasan tempatan terjejas kerana tunggakan cukai taksiran oleh
pemilik rumah.
Di Majlis Perbandaran Manjung, tunggakan cukai taksiran pada
penghujung tahun 2008 adalah RM 3.7 Million. Oleh itu, kajian dijalankan untuk
mengenal pasti masalah cukai taksiran yang dihadapi oleh Majlis Perbandaran Manjung.
100 soal selidik telah diedarkan kepada responden-responden dalam kawasan Manjung
untuk dikenal pasti masalah-masalah cukai taksiran di kawasan berkenaan. Selain itu,
cara-cara bagi meningkatkan kutipan cukai taksiran juga dikenal pasti melalui temu bual
dengan pegawai dalam Jabatan Penilaian dalam Majlis Perbandaran Manjung. Sebagai
kesimpulan, objektif-objektif bagi kajian ini telah dicapai dengan mengenal pasti lapan
faktor yang mempengaruhi kutipan cukai taksiran dan lima cara bagi memperbaiki
kutipan cukai taksiran untuk menambah pendapatan Majlis Perbandaran Manjung.
Daripada kajian ini, cara-cara yang dikenal pasti boleh membantu pihak berkuasa
tempatan untuk mengatasi masalah tunggakan cukai taksiran dan memperbaiki kutipan
cukai taksiran adalah meningkatkan cara kutipan cukai taksiran, penguatkuasaan
undang-undang, mengesahkan alamat pemilik rumah, memperbaiki perkhidmatan yang
disediakan kepada orang ramai dan meningkatkan cara untuk menghantar bil dan notis.
vii
TABLE OF CONTENT
CHAPTER
CHAPTER 1
DESCRIPTION
PAGE
TITLE
i
DECLARATION
ii
DEDICATION
iii
ACKNOWLEDGEMENT
iv
ABSTRACT
v
ABSTRAK
vi
TABLE OF CONTENTS
vii
LIST OF FIGURES
xii
LIST OF TABLES
xiii
LIST OF APPENDIX
xv
INTRODCUTION
1.1
Background
1
1.2
Problems Statement
2
1.3
Objectives of Study
4
1.4
Scope of Study
4
1.5
Significance of Study
4
1.6
Research Methodology
6
1.7
Chapters Sequence
9
viii
CHAPTER 2
LITERATURE REVIEW ON RATES COLLECTION
SYSTEM BY LOCAL AUTHORITY
2.1
Introduction
10
2.2
Definition of Taxation
11
2.3
Definition of Rating
11
2.4
Criteria of Local Taxation
12
2.5
Objectives to Imposed Rating
13
2.6
Significance of Rating
17
2.7
Power Enforce Rate in Malaysia
18
2.8
Rates Collection System
18
2.9
Procedures of Rates Collection System
19
2.9.1 Local Authority will Send Out
19
Statements (or Bills) for Taxes
on Every Rateable Holding
2.9.2 Ways to Deliver Bills
20
2.9.3 Date of Delivery Bills and Rates
20
Assessment Payment
2.9.4 Late Payment of Rates
21
2.10
Arrears in Rates Collection
23
2.11
Problems Faced by Local Authority in
23
Rates Collection
2.12
Procedures to Collect Rates
25
2.14.1 Seize and Sell Movable Property
26
2.14.2 Sale of Property Seized
27
2.14.3 Application of Proceeds of Sale
28
2.14.4 Seize and Sale of Holding
28
2.14.5 Power to Stop and Objection
30
to Seize of Property
2.13
Conclusion
33
ix
CHAPTER 3
PROCEDURE OF STUDY
3.1
Introduction
34
3.2
Research Methodology
34
3.3
Size of Sampling
35
3.4
First Stage: Literature Research
36
3.5
Second Stage: Data Collection
36
3.5.1
Primary Data
37
3.5.1.1 Questionnaire’s Structure
38
Secondary Data
39
3.5.2
3.6
Third Stage: Data Analysis
49
3.6.1
Frequency Statistical Analysis
39
3.6.2
Average Index
39
3.6.2.1 Likert Scale
40
Cross Tabulation
41
3.7
Fourth Stage: Writing Research
41
3.8
Conclusion
43
3.6.3
CHAPTER 4
RATES COLLECTION IN MANJUNG MUNICIPAL
COUNCIL
4.1
Introduction
44
4.2
Background
44
4.3
Population in Manjung Municipal Council
45
4.4
Mission and Vision of Manjung
47
Municipal Council
4.5
Functions of Manjung Municipal
47
Council
4.6
Organization of Manjung Municipal
Council
48
x
4.7
Valuation Department in Manjung
50
Municipal Council
4.8
Rates Collection System in Manjung
53
Municipal Council
4.8.1
Rateable Holdings in Manjung
53
Municipal Council
4.8.2
Percentages of Rates
55
4.8.3
Procedures of Rates Collection
56
System in Manjung Municipal
Council
4.8.4
Methods of Payment of Rates
59
4.8.5
Rates Arrear in Manjung Municipal 60
Council
4.9
Problems Faced by Manjung Municipal
61
Council in Collection of Rates
4.10
CHAPTER 5
Conclusion
62
ANALYSIS OF PROBLEM OF RATES COLLECTION
FACED BY MANJUNG MUNICIPAL COUNCIL AND
WAYS TO IMPROVE IT
5.1
Introduction
63
5.2
Analysis of the Problem of Rates Collection 64
Faced by Manjung Municipal Council
5.2.1
Questionnaires Information
64
5.2.2
Respondents Profile
64
5.2.3
Analysis on Opinion of Respondents 68
to Rates Collection in Manjung
Municipal Council
xi
5.2.4
Analysis of Relationship between
74
Respondents’ Household Salary and
Their Opinion on Rates Imposed is
Beyond Affordable
5.3
Analysis on Ways to Improve Rates
75
Collection System in Manjung Municipal
Council
5.4
CHAPTER 6
Conclusion
77
CONCLUSION AND RECOMMENDATION
6.1
Introduction
79
6.2
Discussion of Findings
79
6.3
Recommendations
82
6.4
Conclusion
82
References
83
Bibliography
86
Appendix
87
xii
LIST OF FIGURES
FIGURE NO.
TITLE
PAGE
2.1
Procedure of Collection of Arrears by Local
32
Authority
3.1
Research Outline
42
4.1
Organization Chart of Manjung Municipal
49
Council
4.2
Organization Chart of Valuation Department of
52
Manjung Municipal Council
4.3
Procedure of Rates Collection by Manjung
58
Municipal Council
5.1
Distribution of Gender and Race of Respondents
65
5.2
Distribution of Age of Respondents
65
5.3
Distribution of Employment Sector of
66
Respondents
5.4
Distribution of Job of Respondents
67
5.5
Education Background of Respondents
67
5.6
Household Salary of Respondents
68
5.7
Number of Respondents Alert with Paying Rates
69
5.8
Number of Respondents Pay Rates on Time
69
5.9
Reasons of Respondents Do Not Pay Rates
71
on Time
5.10
Satisfaction of Respondents to the Facilities and
Services Provided by Local Authority
72
xiii
LIST OF TABLES
TABLE NO.
TITLE
PAGE
2.1
Penalty or Fee Rates for Notice E
22
4.1
Manjung Municipal Council Jurisdiction Area
45
4.2
Estimated Population According to Ethnic in
46
Manjung Municipal Council for the Year of 2007
4.3
Estimated Population in Manjung Municipal
46
Council According to Age for the Year of 2007
4.4
Estimated Total Revenue and Total Expenditure
54
in Manjung Municipal Council
4.5
Percentages of Rates by Area in Manjung
55
Municipal Council
4.6
Penalty or Fee Rates for Notice E
56
4.7
Rates Collection and Arrear from Year 2005
60
To Year 2008
5.1
Married Status of Respondents
66
5.2
Rates Pay Based on Race of Respondents
70
5.3
Rates Pay Based on Occupation of Respondents
70
5.4
Rates Pay Based on Household Salary of
71
Respondents
5.5
Factors Influenced the Problem of Rates
Collection Faced by Manjung Municipal
Council
73
xiv
5.6
Relationship between Monthly Income and
75
Affordable Rates Imposed
6.1
Factors Influenced the Problem of Rates
Collection Faced by Manjung Municipal
Council
81
xv
LIST OF APPENDIX
APPENDIX NO.
TITLE
PAGE
1
Questionnaire form
87
2
Area of Manjung Municipal Council
92
3
Land use of Manjung Municipal Council
93
CHAPTER 1
INTRODUCTION
1.1
Background
Taxes are reality of life and something which is required in order for a country
and all its citizens to prosper. (The Malaysia Government’s Official Portal, 2009)
According to Wan Nor Azriyati Wan Abd Aziz et al (2007), property tax or assessment
tax are generally levied on all types of properties such as residential, commercial, and
industrial, as well as on vacant land. Assessment tax is levied on all holdings situated in
the areas under the jurisdiction of local authority. (The Malaysia Government’s Official
Portal, 2009)
Local Government Act, 1976 (Act 171) define property tax or assessment tax is
as rates. According to Wan Nor Azriyati Wan Abd Aziz et al (2007), rates is a form of
tax levied on all property holdings for the services and facilities provided by the local
authority in their jurisdiction areas. This property tax generates a significant proportion
of revenue for local authority in many parts of the world.
Rates is collected by the local authorities for the provision of services to the
residents. The aim to impose rates is to fund those services provided to residents or
owner of property. (Wan Nor Azriyati Wan Abd Aziz et al, 2007)
2
The amount and classification of properties varies from one local authority to
another. In most states, the amount of assessment tax a house-owner pays is calculated
on the annual value of the property. The annual value of a property is the total value of
rents if the house is rented out in the open market. (Colliers, Jordan Lee & Jaafar Sdn
Bhd, 2006)
1.2
Problems Statement
Assessment tax is collected by the local authorities for the provision of services
to the residents. (Colliers, Jordan Lee & Jaafar Sdn Bhd, 2006) However, the main
income of local authority to provide services and development in the area is affected due
to the arrears of assessment rates of house owners.
“Their houses are beautifully renovated and they have one or more cars. Many of
them have Astro dishes. Obviously, they are not poor. Yet, many of these house owners
have unsettled rentals, maintenance fees, water and electric bills and assessment bills.
These house owners could afford more than one car and yet they just do not want to pay
up.” The Kuala Lumpur City Hall’s (DBKL) Housing Management Department director
Abdul Samad Lope Pihie states this with accordance to the problems of arrears of
assessment rates by public. (The Star, May 23, 2008)
The revenue from rates is often an important source of finance for a local
government. The extent to which those governments have control over property taxes or
rates is thus often an important determinant of the extent to which they are able to make
autonomous expenditure decisions. In many countries, the level, design, and control of
property taxation are critical elements in effective decentralization policy. (Bird and
Slack, 2002)
3
If the property tax is not paid within a specified time period after the due date,
then interest and a late fee are generally charged. According to Bird and Slack (2002),
other enforcement measures are usually taken eventually leading to the sale of the
property to satisfy the tax obligation in cases of long term delinquency. In most
countries, property transfers are not permitted unless property taxes are paid.
In short, tax arrears reduced the revenues generated from the property tax or
rates. Tax arrears tend to be higher in countries that do not have sufficient resources or
expertise to administer the property tax and where enforcement is weak. (Richard and
Enid, 2002)
So, the arrear of rates always is the issue of local authority every year. In
Manjung Municipal Council, the arrear of rates at the end of year 2008 is RM 3.7
Million. This is a huge amount since the aim to impose rates is to fund those services
provided by local authority. In short, the issue of arrear in rates has influenced the
income of the Manjung Municipal Council.
Therefore, this study will focus on
indentifying the roots of this problem and ways to overcome the problem.
From the statement above, the questions arise are:
I.
II.
What are the reasons for the increase in rates arrears?
Why the people or residents refuse to pay rates?
4
1.3
Objectives of Study
The aim of this research is to study rates collection system of Manjung
Municipal Council. The objectives of this study are:
I.
To indentify the problems of rates collection faced by Manjung Municipal
Council.
II.
To identify ways to improve the rates collection and overcome the huge
amount of rates arrear.
1.4
Scope of Study
In this study writer scope only is focused to the problems faced by Manjung
Municipal Council in rates collection system and steps or ways that was taken.
1.5
Significance of Study
Local authorities in Malaysia have been given wide powers within the Local
Government Act of 1976. The functions not only include mandatory functions but
discretionary functions as well. The mandatory functions include all critical functions
such as refuse collection, street lighting and activities pertaining to public health.
Discretionary functions include all development functions such as providing amenities,
recreational parks, housing and commercial activities. (Mohd Yahya, 1987)
5
It is imperative that local authorities upgrade their revenue generating capacity to
meet the fiscal needs as represented by the expenditures required to meet the
multifarious. It is very important for local authorities to provide effective and efficient
services. Theoretically, a local government derives its income from three main sources:
rents and fees for services, grants/subsidies given by the central or state government and
local taxation. (Mohd. Zin Mohamed, 1998)
According to Mohd. Zin Mohamed (1998), assessment rates have been the most
lucrative source of revenue. The Ministry of Housing and Local Government classifies
the sources of income for the local authorities into six groups, namely:
a)
Assessment rates (inclusive of contribution in-lieu-of rates)
b)
Licenses
c)
Rentals
d)
Government grants (inclusive of road grants)
e)
Car parking charges, planning fees, compounds, fines and interests
f)
Loans (from government and/ or financial institutions)
This study could also give guidance of ways should taken to overcome the
problem. Hopefully this study can help local authority overcome arrears problem in
rates collection system and further implement more effective rates collection system.
6
1.6
Research methodology
This research is done by many methods to achieve the two objectives research as
mentioned above. This research will be categories to five stages to ease the process of
collection data and information. The stages of research are as follow:
i)
Literature research

Determine the topic and study field.

Literature research about the rates collection system by local
authority.

Get the information about the rates collection system from books,
journals, articles, and websites.

Obtain the problem statement of problem related to this research.

Identify the scope and objective of research.

Discussion with supervisor to get opinion from him to prepare this
research.
ii)
Data collection
a) Secondary Data

To get the information related to this research, many references are
used. All the references used are from books, journals, articles and
websites.
7
b) Primary Data
iii)

Interview with officer in local authority.

Questionnaires will be distributed to rates payer.
Data analysis
All the information and data get from research will be analysis in detail. The first
objective will be achieved based on questionnaires by rates payer in Manjung Municipal
Council. For second objective, data will be collected from interview then analyze.
Respondent of this research will be selected are rates payer in Manjung Municipal
Council area.
iv)
Writing research report
Writing research is a very important stage in this research. This research report
will be compiling in document.
8
v)
Research outline
First stage
Literature Research




Determine topic and study field
Obtain the source of literature research and do literature
research
Obtain the statement of problem related to this research
Identify the scope and objective of research
Second stage
Data collection


Primary data
o Questionnaire
o Interview
Secondary data
o Journal
o Article
o Reference books
o website
Third stage
Data analysis


Analyze the feedback and information from questionnaire and
interview
Analyze secondary data
Fourth stage
Writing research


All the information from data collection will be write in report
format
Report will be arrange, compile and bind
9
1.7
Chapters Sequence
The write-up of this study is divided into 6 chapters. The first two chapters
cover the theoretical part of the study while the 4 remaining chapters cover the practical
aspects of the study. The chapters are as follows:
Chapter 1: Consist the introduction part of the study. This chapter discusses the
problems statement, aim and objectives, scope of study, significance of study, research
methodology and chapters.
Chapter 2: Chapter 2 mainly discusses rates collection system by local authority.
It comprises the definition and concept of rates, criteria of local taxation, objectives to
impose rates, significance of rating, procedure of rates collection system and the
problems of rates arrear.
Chapter 3: This chapter is the procedure of this study. It discusses the procedure
to collect data to achieve the two objectives of this study. Size of sampling and methods
used to analyze data will also been discussed.
Chapter 4: This chapter looks into the details of rates collection system in
Manjung Municipal Council. It covers the background of Manjung Municipal Council
and rates collection system in Manjung Municipal Council.
Chapter 5: This chapter discusses the analysis based on data collected from
interview and questionnaires. The data collected are converted into more meaningful,
useful and informative formats. This is done to achieve the two objectives stated in
Chapter 1.
Chapter 6: This chapter is the final part of the study. It provides the summation
and conclusion of the study. It also discusses possibilities for future improvements in
undertaking projects of somewhat similar nature to this research.
CHAPTER 2
LITERATURE REVIEW ON RATES COLLECTION SYSTEM BY LOCAL
AUTHORITY
2.1
Introduction
Rates arrear always is the issue of local authority every year. Rates arrear will
decrease the income of a local authority since assessment rates is the biggest part of
income of a local authority. So, the first objective of this study is to identify the factors
that influence the problem of rates arrear by local authority.
This chapter covers the introductory to concept of local taxation.
Writer
describes the concept of rates collection system according to Local Government Act,
1976 (Act 171), and follow by the review of studies carried out by previous researcher in
determining various factors that influence the problem of rates arrear faced by local
authority. This chapter also focuses on the procedures of rates collection system and
procedures to recover rates arrear local authority.
11
2.2
Definition of Taxation
In Malaysia, all income derived from or remitted to Malaysia are liable to tax.
However, as The Malaysia Government’s Official Portal (2008) state that income
derived from outside Malaysia and remitted to Malaysia by resident companies (except
those involved in the banking, insurance, air and sea transportation business), nonresident companies and non-resident individuals are exempted from tax.
Franklin (1817) said, “In this world nothing can be said to be certain, except
death and taxes.” It is safe to add a third certainty of life to those offered by Mr.
Franklin; the tax law will change. Therefore, before making any decision regarding the
purchase, use, or disposition of real property, consultant with a real estate tax expert is
recommended. (Larsen, 2003)
2.3
Definition of Rating
Encylopedia of Real Estate Terms (1978) describes rating is a valuation process
for local taxation. The objective is to estimate the rate or levy on a property. Tax
produce from this process is known as assessment tax.
Hepworth (1980) defines rates are a property tax levied on the annual value of
the property and payable by the occupier of that property. Local authorities levy rates
on the immovable property such as houses shops offices factories within their area of
jurisdiction. (Kay and King, 1978)
Rating is a form of tax levied on property in lieu of the services provided by the
local authority. This property tax generates a significant proportion of local authority
revenues in many parts of the world. (Wan Nor Azriyati Wan Abd Aziz et al, 2007)
12
According to Valuation and Property Services Department, Rating or assessment
is a local government tax imposed on holdings (real property) within a local authority
area for the services rendered by the Local Authority. The power to impose rates is
provided for in the:
a) Local Government Act 1976;
b) Local Government Ordinance of Sabah 1961; and
c) Local Authorities Ordinance 1996 for the State of Sarawak.
According to Local Government Act 1976, local authority can imposed rate on
property with the approval of State Authority. The taxes are generally levied on all
types of properties such as residential, commercial, and industrial, as well as on vacant
land.
2.4
Criteria of Local Taxation
Capacity of a local authority to implement its power and function depend upon
their capabilities to increase revenue from tax. Tax in this context is rate. Rating is a
form of tax levied on property and generates a significant proportion of local authority
revenues. (Ahmad Ariffian Bujang and Hasmah Abu Zarin, 2001)
According to Layfield (1976), local taxation should have the criteria as follow:
a) Must be lies within area of a local authority and local authority should
capable to change or diversify rate on tax.
b) Local taxation must be obvious and accepted by local tax payer. Any
amendment and change must be told clearly by local authority.
13
c) Local taxation imposed can be paid directly by local payer.
d) The basic of tax assessment should uniform and comprehensive.
e) Local taxation does not necessarily contain all features needed in taxation
system, but should take into consideration unwanted nature, which those
features cannot be corrected or being converted in taxation system or interest
system.
2.5
Objectives to Imposed Rating
The Local Government Act of 1976 provides local authorities in Malaysia with a
very comprehensive set of functions and responsibilities. Two other main laws, the
Town and Country Planning Act (1976) and the Street, Drainage and Building Act
(1974), help local governments to perform their functions under the 1976 Act. These
Acts allow the local authorities to assume more developmental functions in the field of
urban management and play a more dynamic role in national development.
As Mohamed Afandi (1989) notes: “Under the provision of the related local
government laws, local authorities may carry out a whole range of functions, limited
only by their own ambitions and resources.”
According to Mohd. Zin Mohamed (1998), the major functions of Malaysia local
authorities can be summarized as environmental, public, social and developmental.
14
a) Environmental
This relates to functions of maintenance and improvement of the
environment within the area of jurisdiction. This includes obligatory services
such as cleansing, collection and disposal of solid wastes, proper drainage
and sewage, sewerage system and beautification programmes.
b) Public amenities
This applies to services such as abattoirs, veterinary services, transportation,
burial grounds and crematoria.
c) Public health and cleansing
This function includes the provision of sanitation and solid waste
management system, cleaning drains and roads and the general upkeep of the
environment. The licensing of hawkers, stall holders, shop and business
operators whose businesses are public nuisances and obnoxious in nature,
falls under this function as well.
d) Social functions
Some larger municipalities provide social services such as childcare centres,
clinics within their health care service programmes, ambulance and hearse
services. Besides these, they maintain fountains and arrange for lighting
public streets and other public services and provide manual labour and
facilities to state governments or the district offices to assist in the
organization of ad hoc social services at the state and district levels.
e) Developmental functions
As opposed to mandatory functions of the local authorities, the development
functions are considered "discretionary" under the Local Government Act,
1976.
Even though local authorities could be regarded as an important
instrument for local socioeconomic modernization, the lack of financial and
15
physical capacity limits the extent and functions that they can provide. This is
particularly the case with district councils.
In the face of rapid growth and the pressure to fulfill multiple needs of the local
citizens and the private sector community, the scope of functions and responsibilities of
local authorities are expanding every day. The increase in the rate of industrialization,
trade, commerce and development of modern services not only pushes the demand for
urban space but also that of urban support services. With an increasing concentration of
people and industries in urban areas, the functions and responsibilities of local
authorities too have significantly expanded. According to Mohd. Zin Mohamed (1998),
this requires local authorities in Malaysia to perform multifarious roles that include:
a) Efficient service delivery functions and employment generation;
b) The normal system maintenance function for public places, drainage and
sewerage, market places and crematorium, road maintenance and streetlighting, landscaping and maintenance, public health and sanitation;
c) The development planning and control and management functions (building
control, land-use planning, development, creation of industrial estates etc.);
d) The promotion of tourism and urban renewal beautification programmes; and
e) Infrastructure development and support facilities which could facilitate
industrial development and other local-based economic development
initiatives.
16
To implement these functions, local planning authorities are required to have
financial resources and this will be accessible through rates collection implementation
by Treasury Department of local authority. Facilities like infrastructure provided by
local authority could raise the value of property in that area. It is reasonable property tax
is imposed on real estate. (Nor Aswalela Abdullah, 1993)
According to Wan Nor Azriyati Wan Abd Aziz et al (2007), rates is a form of tax
levied on property in lieu of the services provided by the local authority. So, tenants
whose are using the services and facilities should pay the rate. In Malaysia, property tax
or rates are imposing on property’s owner but not tenant. This mean that rating is a form
of tax imposed on ownership of a property in a local area.
According to Minnesota Department of Revenue (2008), tax should have
characteristic of:
a) Simple and understandable
b) Stable, predictable, adequate
c) Efficient
d) Fair
e) Competitive
f) Visible
17
2.6
Significance of Rating
Rates form a falling proportion of local authority income with other taxes
through government grant system providing an increasing share of the resources.
(Hepworth, 1980)
Part V, Section 39 of Local Government Act 1976 state the revenue of a local
authority shall consist of:
a) All taxes, rates, rents, license fees, dues and other sums or charges payable to
the local authority by virtue of the provisions of this Act or any other written
law;
b) All charges or profits arising from any trade, service or undertaking carried
on by the local authority under the powers vested in it;
c) All interest on any money invested by the local authority and all income
arising from or out of the property of the local authority, movable and
immovable; and
d) All other revenue accruing to the local authority from the Government of the
Federation or of any State or from any statutory body, other local authority or
from any other sources as grants, contributions, endowments or otherwise.
18
2.7
Power Enforce Rate in Malaysia
Legislation which enforces rate in Malaysia was Local Government Act, 1976.
Part XV in Local Government Act, 1976 entitle the jurisdiction of rating and valuation.
Section 127, Local Government Act, 1976 stated that local authorities must have the
approval from State Authority before imposing any rates on all rateable holding.
Section 127, Local Government Act, 1976 state that:
“The local authority may, with the approval of the State Authority, from time to
time as is deemed necessary, impose either separately or as a consolidated rate,
the annual rate or rates within a local authority area for the purposes of this Act
or for other purposes which it is the duty of the local authority to perform under
any other written law.”
2.8
Rates Collection System
Before the local authority can implement rates collection from all rateable
holding, a Valuation List must been prepared. Valuation List is one complete record of
information of all rateable holding of one local authority. This is stated under Section
137(1), Local Government Act, 1976.
Section 137(1), Local Government Act, 1976, state that:
“The local authority shall cause a Valuation List of all holdings not exempted
from the payment of rates to be prepared containing:
(a) The name of the street or locality in which such holding is situated;
(b) The designation of the holding either by name or number sufficient to identify
it;
19
(c) The names of the owner and occupier, if known;
(d) The annual value or improved value of the holding.”
2.9
Procedures of to Collect Rates
The steps and procedures of rates collection are briefly explained in the Local
Government Act, 1976. Local authority has to follow the procedure in order to avoid the
enforcement of taxes or rates.
The procedures that are involved in rates collection system are as follow:
2.11.1 Local Authority will Sends Out Statements (or Bills) for Taxes on Every
Rateable Holding
Completed Valuation List done by local authority’s Valuation Department will
be sent to Treasury Department. Treasury Department will include all related data for
each holding.
The data will key in computer and rates assessment bills will be issued to every
owner or rates payer for notification of amount of rates which must paid. This bills
delivery made by local authority Treasury Department.
Withdrawn bills by local authority contain details as follows:
a)
Name and address of owner
b)
First term or second term
20
c)
Reminder and actions that would be taken
d)
The name of the street or locality in which such holding is situated
e)
Period or due date for payment
f)
Account number
g)
Withdrawn date of bill
h)
Address of the place of payment centre
i)
Percentage of rating which allocated in section 130, Act 171
j)
The annual value or improved value of the holding
2.11.2 Ways to Deliver Bills
Treasury Department of local authority makes delivery of notice through post, by
hand and also property owner come personally to office to get the notice.
2.11.3 Date of Delivery Bills and Rates Assessment Payment
Local authority will send out rates assessment bills two times a year, which is
first half of the year, bills issued starting 1st of January and second half of the year, bills
issued starting 1st of July each year. This is stated in Section 133, Local Government
Act, 1976 as:
21
“The rates referred to in sections 127 and 128 shall endure for any period not
exceeding twelve months and shall be payable half-yearly in advance by the
owner of the holding at the office of the local authority or other prescribed place
in the months of January and July and shall be assessed and levied in the manner
hereinafter provided.”
Rates assessment payment usually made annually but the owner of property
could pay by installments namely like payment semi-annual that is in month of January
and July. This means that payment made according to bill delivery date like payment
annual installment that is in month of January and July.
If the owner of property wants to make payment in month of January, he will be
allowed make payments till end of February whereas if payment made within month of
July, he is given opportunity to pay till end of August, as stated in Section 147(1), Local
Government Act, 1976 (Act 171).
2.11.4 Late Payment of Rates
Section 147 (1) and Section 147(2) Act 171 state that the amount that must be
paid for the first half of the year be settled before 28th Feb and for the second half of the
year must be settled before 31th August of the said year.
If any of the said amount or any part of it is still unsettled or unpaid until the end
of February or until the end of August in every year accordingly the amount of money
will be regarded as arrears and will be claimed with payment notice as stated. The
amount arrears together with the process cost will be claimed under the powers within
the Local Government Act 1976.
Section 147(1) Local Government Act 1976 state that
22
“If any sum payable in respect of any rate remains unpaid at the end of February
or August, as the case may be, the owner or owners shall be liable to pay the
same together with such fee as the local authority may fix from time to time.”
In Manjung Municipal Council, the penalty or fee rates for Notice E are as
follows:
Arrears
Notice Penalty/ fee
RM100 below
RM4.00
RM100 – RM250
RM8.00
RM251 – RM600
RM12.00
Amount exceeding every RM100 or part of it
RM2.00
Table 2.1: Penalty or Fee Rates for Notice E
Source: Valuation Department of Manjung Municipal Council (2009)
If the owner of property pays assessment rates together with its late payment
charge, this mean he has been recognize as no rates arrear with local authority. However
if the owner of property fail to settle his rates and late payment charge then the owner
will claim as arrear with local authority.
Section 147(2) Local Government Act 1976 state that
“If any such sum or any part thereof remains due and unpaid by the end of
February or by the end of August in each year, as the case may be, it shall be
deemed to be an arrear and may be recovered as provided in section 148.”
This state that if the owner of property fail to pay the sum or part of rates by the
end of February or by the end of August in each year, the owner is claimed as arrear
with local authority. The amount of rates will be recovered as provided in Section 148,
Local Government Act, 1976.
23
2.12
Arrear in Rates Collection
According to Section 147(2) Local Government Act 1976, if the owner of
property fail to pay the rates assessment payment to local authority by the end of
February or by the end of August in each year, it can be define as a arrear and the
payment can be recovered as stated in Section 148 Local Government Act 1976. So,
rates arrear is property tax that is not paid on time.
Section 147(2) Local Government Act 1976 state that
“If any such sum or any part thereof remains due and unpaid by the end of
February or by the end of August in each year, as the case may be, it shall be
deemed to be an arrear and may be recovered as provided in section 148.”
As we know that the rates collection for a local authority is use to prepare
infrastructure and social services to local citizens. It is very important for a development
of a local area. The revenue of a local authority will be affected if the problem of arrears
occurs and directly will influence the development of a particular area. (Nor Aswalela
Abdullah, 1993)
2.13
Problems Faced by Local Authority in Rates Collection
The problems of rates arrears will directly reduce total revenue of a local
government. This depicted by total rates collection which made by a local authority are
not completely and further reflect a local council still weak and need to be improved.
According to Nor Aswalela Abdullah (1993), the factors that influence the
problem of rates arrear which are identified as follow:
24
a) Lack of staffs to handle rates collection system. Number of staffs occurs at
each treasury department of a local authority was not enough compared to
total area of the territory area.
b) Rates payers in a local area are not satisfied with the services which provided
by local authority. Public thought that services which are provided by local
authority was not good enough compared to the total amount of rates they are
pay. For example, rubbish is not collected by local authority. This situation
raises some negative effect for the rates payers whose are stay in that
particular area. The services provided by local authority are not efficient.
This cause the rates payers not dare to pay rates with reason of local authority
do not carry out tasks well and effective.
c) There are some cases of transferring of ownership of property but do not
report to local authority. There are some property has been sold and change
ownership of property but do not report to local authority.
Valuation
department send out the rates assessment bills with the old property’s owner
name but not new property’s owner does not state in the bills. The new
property’s owner refuse to pay rates with reason the bills does not state his or
her name.
d) The rates imposed by local authority are beyond affordable of property’s
owner. This is because of the economic crisis that are occurs last year and
getting worst in this year. The income of property’s owners is affected and
they are not affordable to pay rates.
e) For those houses that are rented out to other parties, most tenant do not care
about rates assessment bills that are send to house. They do not pass the bills
to house’s owners. House’s owners who are the person who need to pay
rates do not receive the rates assessment bills. So, they do not pay rates on
time.
25
f) Vacant land which had no complete address. This situation is difficult for
local authority to send rates assessment bills to property’s owner.
g) Property’s owners do not inform local authority when they are move to other
place and change address. This situation cause the property’s owner cannot
receive rates assessment bills from local authority with their new address
because local authority only got record of their old address.
h)
Sometimes, there are too many names of owner in a lot of land. This
situation normally occurs in a big size land lot. Sometimes, rates assessment
bills do not contain all the name of owners. So, for those owners which their
names do not appear in the bills, they are refused to pay rates to local
authority.
2.14
Procedures to Collect Rates Arrear
Section 148 of Local Government Act, 1976 states the ways to recover an arrear
for the local authority. Before enforced under Section 148, Local Government Act,
1976 to recover arrears, local authority should issue Form E of the First Schedule, Local
Government Act, 1976. It is a notice to inform rates payers to pay rate arrears. This
notice require the property’s owner of rateable holding to pay rates assessment or rate
arrears together with late penalty or process cost within fifteen days from the date
issuance of notice. If the owner of rateable holding pays the rates together with the late
penalty payment in the period stated above, he or she can claim as no rates arrears with
local authority. However, if the owner of rateable holding fails to pay the amount in that
period, local authority will enforce Section 148, Local Government Act, 1976 to collect
the rates arrears. (Ahmad Ariffian Bujang and Hasmah Abu Zarin, 2001)
26
The procedures to recover rates arrears as stated under Section 148, Local
Government Act, 1976 are as follow:
2.14.1 Seize and Sell Movable Property
Section 148(1), Local Government Act, 1976 stated that local authority may
issue a warrant of attachment in Form F of the First Schedule to recover a rates arrear.
Local authority may seize by virtue any movable property that is belonging to the owner
or occupier liable to pay the rates arrear within the local authority area.
Local authority may also seize any movable property belonging to anyone which
is found on the holding in respect of which the rates arrear. These clause states that
local authority can seize any movable property through warrant of seize no matter the
holding is occupied by owner or tenant. (Nor Aswalela Abdullah, 1993)
Warrant of seize or Form F shall be issued by the local authority unless it has
served a notice in Form E of the First Schedule to the owner or any one of the owners at
the last known address. Form E is requiring them to pay the rates arrear within fifteen
days of the posting or delivery. (Ahmad Ariffian Bujang and Hasmah Abu Zarin, 2001)
To enforce the warrant of seize, the officer must provide a list which is known as
inventory of the property attached, and at the same time issue a notice in Form G to the
person in possession of the property at the time of attachment. Section 148(2), Local
Government Act, 1976 state that:
“The warrant shall be executed by an officer of the local authority who shall
make an inventory of the property attached thereunder, and shall at the same
time give notice in Form G of the First Schedule hereto, to the person in
possession of the property at the time of attachment.”
27
However, if the officer which executing the warrant found that the value of the
movable property to be attached is less than the rates arrear to be recovered or there is no
movable property to be seized as in the case of a holding which is vacant or unoccupied,
then the inventory of movable property no need to be done. The officer shall attach a
notice in Form H of the First Schedule of Local Government Act, 1976 at one easily
observable place in the holding. In respect of which the rates arrear is due to the effect
that procedure for the recovery shall be instituted under Section 151, Local Government
Act, 1976.
The officer may break open in the daytime any house or building for the purpose
of seize property as stated in Section 148(3), Local Government Act, 1976. Section
148(4) stated that the fee for a warrant of seize shall be of such amount as the local
authority may fix from time to time and shall be costs of the attachment.
2.14.2 Sale of Property Seized
After the owner receive the warrant of seize in Form F of First Schedule, Local
Government Act, 1976, if the rates arrear with costs remain unpaid within seven days
from the date of warrant of seize, the property attached or such part of it shall be sold by
public auction. This is stated under Section 149(1), Local Government Act, 1976 as:
“Unless the arrear with costs be paid within seven days from the date of the
attachment the property attached or such part thereof as may be necessary shall
be sold by public auction.”
If the property seized is of a perishable nature or where expense of keeping it in
custody will exceed its value it may be sold at once. Section 149(2), Local Government
Act, 1976 state that the expenses of the maintenance of livestock and the custody of
moveable property shall be costs of the arrest.
28
2.14.3 Application of Proceeds of Sale
The application of proceeds of sale from property arrested is stated under Section
150, Local Government Act, 1976. Section 150, Local Government Act, 1976 state that:
“The proceeds of sale shall be applied in satisfaction of the arrear together with
interest thereon at the rate of six per centum per annum and costs, and the
surplus, if any, shall be paid to the person in possession of the property at the
time of attachment.”
The proceeds of sale of seized property by local authority for purpose of recover
rates arrear should used to pay for:
a) Arrear together with interest at the rate of six per centum per annum.
b) Costs of seize.
c) If got surplus, shall be pay back to the owner of the property when the
holding is arrested.
2.14.4 Seize and Sale of Holding
In the manner provided in Section 148(2), Local Government Act, 1976, if the
rates arrear cannot be recovered because of the value of the movable property is less
than the rates arrear to be recovered or there is no movable property to be seized or the
holding is vacant or unoccupied, so the recovery shall be instituted under Section 151,
Local Government Act, 1976.
Section 151(1), Local Government Act, 1976 state that:
29
“If the arrear cannot be recovered in the manner provided in section 148 it shall
be lawful for the Registrar of the High Court upon application made by the local
authority, or by any officer of the local authority authorized by the local
authority in that behalf, to order the attachment and sale of the holding or
holdings in respect of which the arrear has accrued.”
This mean that local authority should firstly made application to the Registrar of
the High Court to get order to arrest and sale of the holding in respect of which the rates
arrear has accumulated over time. Seize and sale in this situation should effected in the
manner provided by the law relating to civil procedure as stated in Section 151(2), Local
Government Act, 1976. Section 151(2), Local Government Act, 1976 state that:
“Such attachment and sale may be effected in the manner provided by the law
relating to civil procedure for the execution of a decree by attachment and sale
of immovable property.”
Section 151(3), Local Government Act, 1976 state that the Registrar of the High
Court shall from the proceeds of sale of property provide for:
a) Costs of seize and sale.
b) Payment to the local authority of the amount of the rates arrear together with
interest thereon at the rate of six per centum per annum.
c) in the event of there being any surplus remaining the Registrar shall, if he is
satisfied as to the right of any person claiming such surplus, pay the amount
to him, and if he is not so satisfied, shall place the amount on deposit in the
Treasury to be held in trust for the person who may ultimately succeed in
establishing his claim.
30
2.14.5 Power to Stop Sale and Objection to Seize of Property
Any person who has any interest in property can stop the sale unless he or she
pays the rates arrear together with interest and costs to local authority before the
property been sold. This is stated under Section 153, Local Government Act, 1976
which state that:
“If any person having any interest in any property liable to be sold under this
Part at any time previous to such sale tenders the arrear with interest and costs
the local authority shall thereupon desist from all further proceedings in respect
thereof, and where the property has been attached by the Court under section
151 he shall inform the Court of such payment.”
If the person dissatisfy with the arrestment by local authority for the purpose of
recover rates arrear, he or she can apply to the High Court to object the action of seize.
Such objection only can apply to High Court; in the case of the action of seize is a
holding. Apart from that, if property seized was movable property, application to object
need to be applied of Magistrate’s Court. This is stated under Section 154(1), Local
Government Act, 1976 which state that:
“If any person whose property has been attached under the provisions of this
Part disputes the propriety of the attachment he may apply to the High Court, in
the case of the attachment of a holding, or the Magistrate’s Court in the case of
the attachment of movable property, for an order to stay the proceedings, and
such Court after making such enquiry as may be necessary shall make such
order on the premises as may be just.”
31
However, before the applicant can submit an application of objection, he or she
must first deposit the amount of the rates arrears with interest and costs with local
authority. Court would not entertain any objection that are requested if the applicant no
or failed to pay that deposit, like those stated under section 154(2), Local Government
Act, 1976. Section 154(2), Local Government Act, 1976 state that:
“No application shall be entertained by any court unless the applicant has
deposited with the local authority the amount of the arrear with interest and
costs.”
Figure 2.1 describe the procedure of collection of arrears by local authority.
32
Local authority sends out
statements (or bills) for taxes
on every rateable holding
Property owner must pay the
Pay
End
rates in stated period
Fail
Local authority issues Form E
and penalty been charge
Fails to pay in
15 days
Local authority issues Warrant
of seize in Form F
Local authority enforces the
warrant of seize. Provide
inventory list and issue Form G
Fails to pay in
7 days
Sale of movable property in
public auction if no objection
on arrestment or the amount of
rates arrears, interest and cost
remain unpaid
Figure 2.1: Procedure of Collection of Arrears by Local Authority
Source: Ahmad Ariffian Bujang and Hasmah Abu Zarin, (2001)
Prinsip Penilaian Statut (page 87)
33
2.15
Conclusion
Local Government Act, 1976 entitle the jurisdiction of rating and valuation.
Local authorities must have the approval from State Authority before imposing any rates
on all rateable holding. The revenue from assessment rates every years become the
major revenue for a local authority. So, the procedure in rates collection system by local
authority must follow the enforcement in Local Government Act, 1976 to make sure the
major revenue of local authority do not affected. Besides that, Local Government Act,
1976 also states the ways to recover an arrear for the local authority.
Based on literature research by writer, there are many problems occurs in
collection of rates by a local authority. One of the problems is lack of staffs to handle
rates collection system. Rates payers in a local area are not satisfied with the services
which provided by local authority also cause them dare not to pay rates. Besides that,
officer in Valuation Department cannot identify the address of property’s owner and
cause property’s owner cannot receive assessment bills. The rates imposed by local
authority are beyond affordable of property’s owner is also the problem faced by local
authority in collection of rates.
In next chapter, writer will discuss about the procedure of this study to achieve
the two objectives and scope of this study.
CHAPTER 3
PROCEDURE OF STUDY
3.1
Introduction
The definition and concept of rates in rates collection system by local authority is
described in Chapter 2. Besides that, the procedures to collect rates and rates arrear
according to Local Government Act, 1976 also been explained.
The procedure of study in this chapter serves as a guide to the author in
achieving the objectives and scopes of the study. This chapter shall further discuss in
detail the study procedures, from how the data is collected till how it is processed and
analyzed to achieve the objectives and scopes of the study.
3.2
Research Methodology
This study is done by using interview and questionnaires surveys from targeted
respondents to achieve the two objectives of this study.
highlighted in chapter 1 are:
The two objectives as
35
I.
To indentify the problems of rates collection faced by Manjung Municipal
Council.
II.
To identify ways to improve the rates collection system and overcome the
huge amount of rates arrear.
For the first objective, research will be done by using methods of questionnaire
and interview. The writer will have interview with officer in Valuation Department of
Manjung Municipal Council, Perak.
The problems faced by Manjung Municipal
Council in collecting rates will be discussed. Besides that, the actions that the Manjung
Municipal Council will be taking to recover arrear will also be discussed.
The factors influenced the problems of rates collection faced by Manjung
Municipal Council will be found after interview and questionnaire. Writer then will
make suggestions of ways to improve rates collection system in local authority.
3.3
Size of Sampling
Based on the two objectives stated above, the sample of population for this study
is rates payers in the area of Manjung Municipal Council. According to structure plan of
State of Perak Darul Ridzuan, the estimated population within the jurisdiction areas of
Manjung Municipal Council is 163, 513 people for the year of 2007.
To obtain a suitable number of samples, Taro Yamane formula was used to
calculate sample size as follow (Yamane, 1967).
36
N
n
=
1+Ne2
Where n = no of sample
N = Total population
e = error rate
Size of samplings of questionnaires distribution is calculated using Yamane’s
formula. The acceptable 10% error rate will be used, thus the sample size will be 100
samples will be sampled at area of Manjung Municipal Council. (Ariya Aruninta, 2003)
3.4
First Stage: Literature Research
At this stage, it involves the identification and further understanding of the
research topic, which consists of problem statement, research objectives and scope of
studies. Literature review has been done on several references, either from electronic
journals, books, magazines, articles and so on to further enhance the understanding on
the research topic. Based on the objectives and scopes of the study, the research will be
focused on the ways to solve and to achieve the objectives of this study.
3.5
Second Stage: Data Collection
After early understanding has been completed, data collection would be made.
Data collection is an essential aspect of the research methodology, where it involves
ways to collect data and information to assist in the data analysis and interpretation.
Data collection can be done in primary and secondary data form. Research methodology
37
can help in determine types, methods and sources to get data. Two types of data were as
follows:
3.5.1
Primary Data
Primary data was data derivative from feedback of respondent of questionnaire.
The questionnaires will be distributed to rates payers in Manjung Municipal Council
Area. Besides that, the writer also will interview with officer in Manjung Municipal
Council to get information about rates collection system in that area.
Handing out questionnaire is an approach to determine the factors that influenced
the problems of current rates collection system faced by Manjung Municipal Council. It
was designed to gather information which is not available from literature review.
Generally, two approaches of questionnaire has been handed out, namely
quantitative approach and qualitative approach. Quantitative approach, in short, is a
systematic way of questionnaire where corresponding parties are required to complete
the questionnaire by answering one or more answer from a list of given alternatives.
The statistical report can therefore be generated.
Whereas, for qualitative approach, questions are set in the form of semistructured or non-structured.
Semi-structured questions require the respondent to
complete a list of questions based solely on their experience and opinion. As for the
non-structured questions, the respondents are required to explain subjectively the answer
given by them.
Questionnaire is an effective way for the purpose of gathering information and
data that are not available through literature studies.
However, the limitation of
questionnaire is that it is subjected to the willingness and cooperation of the respondent
in completing the questionnaire. Therefore, it is necessary to design the questionnaire as
38
straight-forward as possible to obtain information related to the objectives of the study.
Another important criterion when designing the questionnaire is the time to complete it.
It should be designed to be completed in the shortest time possible for the convenience
of the respondent.
3.5.1.1 Questionnaire’s Structure
Questionnaire is designed to get information from respondents to achieve the
first objective of this study. The questionnaire is designed into two part that is part A
and part B. Part A will get the respondents profile such as gender, race, age, marital
status, employment sector, occupation, status of employment, education background and
household salary. Meanwhile, part B is designed to obtain the opinion of respondents
about rates assessment. Eight factors that will influence the problem of rates collection
identify from literature research will be list out for respondents to rank based on their
opinion. The eight factors are as follow:
a) Rates imposed is beyond affordable
b) Time given is not enough
c) Services for rates collection is not efficient
d) Billing services is not good enough
e) The place for pay rates is far (Distance problem)
f) Not satisfied with the services provided
g) Not understand the need of paying rates
h) Not receive assessment bill on time
39
3.5.2
Secondary Data
Literature review is an important part in the study in terms of gathering
secondary data.
Important and resourceful information can be obtained to gain
understanding of the study. Several references are used either from electronic journals,
books, magazines, articles and so on.
3.6
Third Stage: Data Analysis
The information and data gathered through questionnaire will be compiled and
processed in relation to the objectives and scope of study. Two statistical methods will
be applied, namely descriptive statistic and quantitative statistics.
Result from the
findings will be presented in the form of graphs, histogram and pie chart for easier
understanding.
3.6.1
Frequency Statistical Analysis
This analysis is conducted to seek frequency of a choice. Choice which obtains
highest frequency mark that is choice with majority respondent.
Frequency is
interpreted in percentage form and is illustrated in tabular form, pie chart or bar chart.
3.6.2
Average Index
Average index is being calculated based on the formula of:
Σ aixi
Average Index
=
Σ xi
40
Where a
= constant, weighing factor for i,
x
= frequency of respondent
i
= 1, 2, 3……n
A scale of 5 categories has been used for the average index method in order to
show priority. The scales of 5 categories are:
1=
“Strongly disagree”
1.00 ≤ Average < 1.50
2=
“Disagree”
1.50 ≤ Average < 2.50
3=
“Moderately agree”
2.50 ≤ Average < 3.50
4=
“Agree”
3.50 ≤ Average < 4.50
5=
“Strongly agree”
4.50 ≤ Average < 5.00
3.6.2.1 Likert Scale
The Likert Scale is an ordered, one-dimensional scale from which respondents
choose one option that best aligns with their view. All options usually have labels,
although sometimes only a few are offered and the others are implied. A common form
is an assertion, with which the person may agree or disagree to varying degrees.
Each respondent is asked to rate each item on some response scale. For instance,
they could rate each item on a 1-to-5 response scale where:
1. = strongly disagree
2. = disagree
3. = undecided
4. = agree
5. = strongly agree
41
3.6.3
Cross Tabulation
A cross tabulation is often call as cross tab. It is a statistical technique that
establishes an interdependent relationship between two tables of values, but does not
identify a causal relationship between the values. Cross tabulation displays the joint
distribution of two or more variables. They are usually presented as a contingency table
in a matrix format. Whereas a frequency distribution provides the distribution of one
variable, a contingency table describes the distribution of two or more variables
simultaneously. Each cell shows the number of respondents who gave a specific
combination of responses that is each cell contains single cross tabulation. (Business
Dictionary and Wikipedia, 2009)
3.7
Fourth Stage: Writing Research Report
At this final stage, all the information from data collection will be write in report
format. A conclusion will be drawn out based on the results of the analysis obtained.
Report will be arrange, compile and bind.
42
First stage
Literature Research




Determine topic and study field
Obtain the source of literature research and do literature
research
Obtain the statement of problem related to this research
Identify the scope and objective of research
Second stage
Data collection


Primary data
o Questionnaire
o Interview
Secondary data
o Journal
o Article
o Reference books
o website
Third stage
Data analysis


Analyze the feedback and information from questionnaire and
interview
Analyze secondary data
Fourth stage
Writing research


All the information from data collection will be write in report
format
Report will be arrange, compile and bind.
Figure 3.1: Research Outline
43
3.8
Conclusion
There are four main stages in producing this research. The four main stages of
research procedure for this study are literature research, data collection, data analysis
and writing research. Literature research is done to get information about the study field
and identify the objectives and scope of research. Primary data and secondary data is
collected and analysis to achieve the objectives and scope of research. Finally, all the
information will be written in report format and the report will be arrange, compile and
bind.
In next chapter, writer will discuss the background of Manjung Municipal
Council. The procedure of rates collection in Manjung Municipal Council will be
explained. The problems of rates collection faced by Manjung Municipal Council will
also be discussed.
CHAPTER 4
RATES COLLECTION EXERCISE IN MANJUNG MUNICIPAL COUNCIL
4.1
Introduction
The procedure of study was discussed in previous chapter. The procedure is
important to make sure the data collected from interview and questionnaire surveys can
achieve the first objectives of this study.
This chapter covered the background and population of Manjung Municipal
Council. The function of Valuation Department in Manjung Municipal Council will also
be discussed. At the end of this chapter, the writer will explain the procedure of rates
collection and problems faced by Manjung Municipal Council.
4.2
Background
Manjung District Council (MMC) was established in 1980 with the merge of
various local government administration boards. The total jurisdiction area is 301.82
square kilometer.
Manjung District Council was upgrade to Manjung Municipal
Council on 10th November 2001. Manjung Muncipal Council jurisdiction areas are
divided into:
45
AREA DIVISION
MMC TOTAL AREA
Operation Area
180.47
Control / Regulation Area
121.35
Total
301.82
Table 4.1: Manjung Municipal Council Jurisdiction Areas
Source: Manjung Municipal Council (2009)
The areas which are included in Manjung Municipal Council are as follow:
a) Sitiawan
b) Kampung Koh
c) Bandar Baru Seri Manjung
d) Kampung Cina
e) Lumut
f) Sungai Wang
g) Ayer Tawar
h) Beruas
i) Pantai Remis
j) Segari / Damar Laut
k) Pulau Pangkor
l) Kampung Baru
4.3
Population in Manjung Municipal Council
According to structure plan of State of Perak Darul Ridzuan, the estimated
population within the jurisdiction areas of Manjung Municipal Council are 163, 513
people. In that number of people, ethnic of Bumiputera cover 40 percentages and ethnic
of Chinese cover 32 percentages.
Ethnic of Indian cover 25 percentages of total
population in Manjung Municipal Council area while the 3 percentages are others ethnic.
46
Table 4.2 shows the estimated population according to ethnic in areas of Manjung
Municipal Council for the year of 2007.
Ethnic
Number of People
Percentage
Bumiputera
65,405
40
Chinese
52,325
32
Indian
40,878
25
Lain-lain
4,905
3
Total
163,513
100
Table 4.2: Estimated Population According to Ethnic in Manjung Municipal Council for
the Year of 2007.
Sources: Structure Plan of State of Perak Darul Ridzuan (2009)
Table 4.4 shows the estimated population within the area of Manjung Municipal
Council according to age groups for the year of 2007.
Age Group
Number of People Percentage
0 - 14 years old
52,390
32.04
15 - 64 years old
101,378
62
65 years old and above
9,745
5.96
Total
163,513
100
Table 4.3: Estimated Population in Manjung Municipal Council According to Age for
the Year of 2007
Source: Structure Plan of State of Perak Darul Ridzuan (2009)
47
4.4
Mission and Vision of Manjung Municipal Council
The missions of Manjung Municipal Council are to guarantee efficient, friendly
and quality services to each customer or client as well as to strive in making Manjung
Municipal Council a harmonious, clean and beautiful area or place or district.
The vision of Manjung Municipal Council is towards a developed, progressive
and prosperous Manjung Municipality.
4.5
Functions of Manjung Municipal Council
To obtain the mission and vision of Manjung Municipal Council, the functions of
Manjung Municipal Council are as follow:
a) Responsible in administration of Council areas which includes the towns and
the surrounding areas as gazetted under Local Government Act 1976.
b) Responsible for collection of yearly revenues as well as striving to increase
the amount of yearly revenues through new sources of revenue.
c) To create good relationship with all parties (clients, taxpayers and others)
who are directly and indirectly involved in the context of achieving council’s
mission and objectives.
d) To plan and execute council’s efficient and quality services in fulfilling the
needs of a living society towards the creation of peaceful living environment.
48
e) Responsible in administrating Manjung area through control of business and
industrial activities as well as to create conducive environment to attract
more investors.
f) To control, plan and approve physical development in line with the needs of
the Structuring and Local Plans.
g) To plan and execute progress of Council area with attention to the
development based on the conservation of environment and to create a
balanced and harmonious city society
4.6
Organization of Manjung Municipal Council
Manjung Municipal Council is leaded by Yang Dipertuan follow by Setiausaha.
There are ten departments and three special units function to provide more efficient
services to local people from Manjung Municipal Council area. The three special units
are One Stop Centre Counter Unit (OSC), Internal Audit Unit and Lumut Management
Unit and Development. The 10 departments in Mnjung Municipl Council are as follow:
a) Building Department
b) Engineering and Maintenance Department
c) Health Department and Town Services
d) Management Service Department
e) Community and Social Development Department
f) Assessment Department
g) City Planning Department
h) Treasury Department
i) Information Technology Department
j) Law Department
Figure 4.1: Organization Chart of Manjung Municipal Council
Source: Manjung Municipal Council (2009)
49
50
4.7
Valuation Department in Manjung Municipal Council
Valuation Department is responsible to prepare valuation list and collect rates in
Manjung Municipal Council Area. The functions of Valuation Department in Manjung
Municipal Council are:
a) To prepare Valuation List for all types of assets in rateable area for the
General Assessment Tax.
b) To evaluate and prepare Evaluation List to all buildings belonging to the
Federal Government, State Government and Statutory Body in the rateable
area for the Contribution Aid of Rates.
c) To make amendments to the Evaluation List from time to time according
to the “Tone of the List” which was gazetted and enforced beginning 1st
Jan, 1989 from time to time until the date determined by the Council and
the State Authority.
d) To prepare, check and confirmed reports regarding burnt or collapsed
houses to be cancelled from the Evaluation List. To also ensure that
revenue from empty houses are returned.
e) To register change of property ownership to the Database, Possession File
and Registration Book for Assessment Tax.
f) To prepare statement for the Government Broadcast to enforce rights given
under the Section 127, 1976 Local Government Act.
g) To manage the distribution of the Assessment Tax Bills for the first half
year or first term, and second half year or the second term.
51
h) To keep plans that disclose the borders of the Council’s areas that have
been gazetted.
i) To update records through the Revaluation. This is done every five (5)
years.
Figure 4.2: Organization Chart of Valuation Department of Manjung Municipal Council
52
Source: Valuation Department of Manjung Municipal Council (2009)
53
4.8
Rates Collection System in Manjung Municipal Council
In exercise of power conferred by Section 127 of the Local Government Act,
1976, the Manjung Municipal Council with the approval of State Authority imposed
rates on all rateable holdings.
4.8.1
Rateable Holdings in Manjung Municipal Council
According to Section 2, Local Government Act, 1976, holding means any land,
with or without buildings attach on it, which is held under a separate document of title
and in the case of subdivided buildings, the common property and any parcel of it.
Meanwhile, rateable holding is a holding which is subject to the payment of a
rate made and levied under Local Government Act, 1976 (Act 171), no matter the
holding is a vacant land or land attach with building on it.
In Manjung Municipal Council, the holdings which are categorized in rateable
holding are as follow:
a) Land attach with building such as housing, low cost house, terrace house,
shop lot, factory or office on it
b) Vacant land
c) Agriculture land with buildings
d) Quarry
54
According to Mohamed Affandi Ismail (1995), the major source of revenue is the
assessment rates which is 47 percent of total revenue for local authority in Peninsular
Malaysia. The collected rates in Manjung Municipal Council is about 48 percent of the
total revenue. (Manjung Municipal Council, 2008) Total revenue from assessment rates
is RM16,149,719.65 for the year of 2008. The total rateable holdings are 58,235 units
until end of year 2008.
The total amount of rates collection is increasing from year to year. In the year
of 2005, the amount of collected rates is RM10,814,837.00. In the year of 2006, the
amount of collected rates is increasing until RM12,107,234.46.
The amount keep
increasing in year of 2007 which is RM13,551,045.00. In the year of 2008, the amount
of collected rates increase until RM16,149,719.65.
Manjung Municipal Council has used the collected rates to accommodate for
their expenditure. Besides that, the revenue is also been used to improve public services,
facilities and development within her administration areas.
The estimated total revenue and expenditure in area of Manjung Municipal
Council is:
Revenue:
Revenue from rates
RM
16,149,719.65
Revenue not from rates
RM
17,289,405.35
Total Revenue
RM
33,439,125.00
Management
RM
35,600,119.00
Development
RM
860,040.00
Total Expenditure
RM
36,460,159.00
Expenditure:
Table 4.4: Estimated Total Revenue and Total Expenditure in Manjung Municipal
Council
Source: Treasury Department of Manjung Municipal Council (2008)
55
4.8.2
Percentage of Rates
The percentage of rates is a percentage imposed by Manjung Municipal Council
which is based on valuation on rateable holdings and has been used to collect assessment
rates for every rateable holding.
In exercise of power conferred by Section 127 and 163 of the Local Government
Act 1976, the Manjung Municipal Council with the approval of the State Authority
imposes for the year 2009 the annual rates upon all holdings and buildings to which
Section 163 applied within areas of the Manjung Municipal Council.
Area
Annual rates
Sitiawan
9.5%
Lumut
9.5%
Seri Manjung
9.5%
Pantai Remis
8.5%
Kg. Koh
8.5%
Beruas
8.5%
Pangkor
9.0%
Kg. Cina
8.5%
All Kg. Baru
5.5%
Vacant Agriculture Land
1.5%
Vacant building
4.5%
Table 4.5: Percentage of Rates by Area in Manjung Municipal Council
Source: Valuation Department of Manjung Municipal Council (2009)
56
4.8.3
Procedures of Rates Collection System in Manjung Municipal Council
Before the Manjung Municipal Council implements rates collection from all
rateable holding, Valuation Department will prepare a Valuation List with complete
record of information of all rateable holdings.
Manjung Municipal Council will send out rates assessment bills two times a
year. Generally, for first half of the year, bills issued starting 1st of January of the year.
Meanwhile, bills issued starting 1st of July for second half of the year. However,
Manjung Municipal Council started to send out all the assessment bills for first half of
2009 on 1st of December 2008 to the owners of holdings. This aims to make sure the
time given to pay rates is enough for rates payers.
The due date to pay rates for first half of year is 28th of February of the year and
31st of August for second half of the year. For those rates payers who are fail to pay
rates in that period, Manjung Municipal Council will issue Notice E to that particular
owner. Notice E will be issued or posted on March for first half of the year and
September for second half of the year. The owner of property should pay all the amount
of arrear together with penalty fees in 15 days from the date of notice issued. The
penalty or fee rates for Notice E are as follows:
Arrears
Notice Penalty/ fee
RM100 below
RM4.00
RM100 – RM250
RM8.00
RM251 – RM600
RM12.00
Amount exceeding every RM100 or part of it
RM2.00
Table 4.6: Penalty or Fee Rates for Notice E
Source: Valuation Department of Manjung Municipal Council (2009)
57
If the said amount still not received by Manjung Municipal Council, warrant of
seize will be issued. The warrant will enable Manjung Municipal Council officers to:

Seize movable asset located within the building.

Seal the building from operation (Section 148).

Auction the building/ land through High Court Registration (section 151)
Figure 4.1 describes the procedures to collect rates and rates arrear by Manjung
Municipal Council.
58
Valuation Department will
prepare Valuation List for all
rateable holdings
Sends out assessment bills on
every rateable holding
Property owner must pay the
Pay
End
rates in stated period
Due data: 28th Feb and 31st Aug
Local authority issues Form E
and penalty been charge
Fails to pay in 15 days
Local authority issues Warrant
of seize in Form F
Local authority enforces the
warrant of seize. Provide
inventory list and issue Form G
Fails to pay in 7 days
Sale of movable property in
public auction if no objection
on arrestment or the amount of
rates arrears, interest and cost
remain unpaid
Figure 4.1: Procedure of Rates Collection by Manjung Municipal Council
Source: Valuation Department of Manjung Municipal Council (2009)
59
4.8.4
Methods of Payment Assessment Rates
Manjung Municipal Council provides several methods to rates payers to pay
rates. The methods provided are convenient and to encourage rates payers to pay rates
on time. The convenient methods provided are as follow:
a) Monthly installment payment
This facility is open to all owners to settle assessment arrears by monthly
installment within the said year. Payment schedule will be issued for eligible
owners.
b) Payment by post
Payment using crossed check, money order and bank draft to Yang DiPertua
Manjung Municipal Council attached to the bill or by writing the account
number of general assessment rate at the back of check/ money order/ postal
order.
c) Payment using credit card
d) Payment through monthly rental reduction
Property holders can pay tax arrears by directing tenants or allowing
Manjung Municipal Council to direct tenants to settle the arrears by
deducting monthly rent.
e) Counter Payment
60
4.8.5
Rates Arrear in Manjung Municipal Council
Manjung Municipal Council faces the problem of arrear in rates collection every
year. This will influence the revenue of Manjung Municipal Council since revenue of
rates assessment is the major component of total revenue. The revenue is used for
development in Manjung Municipal Council and provides good facilities and services to
public. Table 4.7 shows the rates collection and arrear of Manjung Municipal Council
from 2005 to 2008.
Year
2005
2006
2007
2008
Estimated Rates
Collection
Arrear
Cumulative of
Assessment
Arrear End of Year
(RM)
(RM)
(RM)
(RM)
12,919,226.00
10,814,837.00 1,482,650.36
13,565,870.00
12,107,234.46 1,469,438.21
4,500,000.00
14,797,634.00
13,551,045.00 1,665,588.12
4,100,000.00
15,986,030.80
16,149,719.65 1,229,331.25
3,700,000.00
Table 4.7: Rates Collection and Arrear from Year 2005 to Year 2008
Source: Valuation Department of Manjung Municipal Council (2009)
Based on data in Table 4.7, the rates arrear is 13.7% for the year of 2005. The
total amount of rates arrear in 2005 is about 1.4 Million. The percentage of rates arrear
is decrease to 12.1% in 2006 and 12.3% in 2007. In 2008, the percentage of rates arrear
is decrease to 7.6% of total amount of rates collection. The cumulative rates arrear at
the end of 2008 is 3.7 Million. The amount is huge since the amount of assessment rates
is the main revenue of Manjung Municipal Council.
61
4.9
Problems Faced by Manjung Municipal Council in Collection of Rates
According to officer in Assessment Department of Manjung Municipal Council,
there are some problems faced by Manjung Municipal Council when collect rates from
rates payers. One of the main problems is some assessment bills cannot reach to owner
of property. Then, the owner of property cannot receive the assessment bill which cause
them did not pay rates. Mostly, this will happen when transferring the ownership of
property did not report to Manjung Municipal Council office. According to section 160,
Local Government Act 1976 (Act 171) when a rateable holding within a local authority
jurisdiction is sold or transferred the seller or buyer/ receiver must executed transfer
within 3 months after selling or transfer, 4 notice regarding it should be given to the
local authority in Form 1 or Form I (upon death). Because of the assessment bill cannot
be reached to the new owner of property, so they do not pay rates.
Besides that, there are some cases which the owner of property cannot be
detected when officer need to send assessment bill to owner. For example of vacant
land which had no complete address. This situation is difficult for local authority to
send rates assessment bills to property’s owner.
The attitude of rates payers also is the problems faced by Manjung Municipal
Council in collect rates. Some rates payers intent to pay rates late which has increase the
rates arrear.
62
4.10
Conclusion
The amount of collected rates in Manjung Municipal Council is increasing every
year to support the increasing amount of expenditure over year. So, it is very important
to make sure rates collection is efficient since assessment rates is major components of
total revenue in Manjung Municipal Council.
From interview with officer in Valuation Department of Manjung Municipal
Council, there are three main problems faced by Manjung Municipal Council in rates
collection. The first problem is some assessment bills cannot reach to the owner of
property. Besides that, there are some cases which the owner of property cannot be
detected and the attitude of rates payers themselves.
Analysis of the factors that influence the problem of rates collection faced by
Manjung Municipal Council will be discussed on next chapter. Besides that, writer will
also suggest several ways to improve the rates collection in Manjung Municipal Council
to overcome the problem of rates arrear.
CHAPTER 5
ANALYSIS OF THE PROBLEM OF RATES COLLECTION FACED BY
MANJUNG MUNICIPAL COUNCIL AND WAYS TO IMPROVE IT
5.1
Introduction
Chapter 4 describe about the procedure of rates collection in Manjung Municipal
Council. The problem of rates collection faced by Manjung Municipal Council was
identified after interview with officer in Valuation Department.
This chapter focuses on analyzing the results gathered from the respondents
through interview and questionnaire.
The data collected are converted into more
meaningful, useful and informative formats that are in the form of tables and figures.
The data also will be expressed in the form of percentage and according to the suitability
of the analysis itself. The research aims to identify the factors influenced the problems
of rates collection system faced by Manjung Municipal Council. The research also
identifies ways to improves rates collection system of local authority based on problems
faced by local authority in rates collection.
64
5.2
Analysis of the Problem of Rates Collection Faced by Manjung Municipal
Council
There were a total of 100 sets of questionnaires distributed to the targeted
respondents whose own property in the area of Manjung Municipal Council. The
questionnaires were distributed to targeted respondents by hand.
5.2.1
Questionnaires Information
The questionnaire is divided into 2 parts that are Part A and B. The question is
divided into different parts so that the analysis can be done systematically and reflects a
logical result. Part A is designed to get the general information of respondents while
Part B discussed the opinion of respondents about rates collection system in Manjung
Municipal Council.
5.2.2
Respondents Profile
a) Gender and Race
There are 100 respondents for this study. From these 100 respondents, there
are 56 males and 44 females. For category of races, there are 34 peoples of
Malay, 64 peoples of Chinese and 2 peoples of Indian. Figure 5.1 shows the
numbers of respondents according to sex and race.
65
Figure 5.1: Distribution of Gender and Race of Respondents
b) Age Group of Respondents
For this research, writer categorized the age of respondents into 8 groups
which is shown in table below. From the Figure below, we can see that most
of the respondents are from age 36 to age 40.
There are 70% of the
respondents are more than 36 years old. This shows that the age for a people
to afford to buy a house is above 36 years old.
Figure 5.2: Distribution of Age of Respondents
66
c) Marital Status
Table 5.1 shows the Marital Status of 100 Respondents. From the table, we
can see that there are 81% of respondents are married and 19% of
respondents are single.
Marital
Number of
Status
Respondents
Married
81
Single
19
Total
100
Table 5.1: Marital Status of Respondents
d) Employment Sector
There are 51% of the respondents are work in private sector while 49% of the
respondents are work in government sector.
Figure 5.3 shows the
distribution of employment sector of respondents.
Figure 5.3: Distribution of Employment Sector of Respondents
67
e) Job
Figure 5.4 show the distribution of job of Respondents. Most respondents
are work in education area which is 38% of respondents follow by
businessman which is 16% of respondents.
Figure 5.4: Distribution of Job of Respondents
f) Education Background
Most respondents have education background with secondary school which is
32% follow by Diploma holder which is 25%. There are 23% of respondents
are Degree holder and the left of 20% is primary school.
68
Figure 5.5: Education Background of Respondents
g) Household Salary
From the questionnaire collected from respondents, the most respondents
earn RM 2,001 – RM 3,000 per month. There are 57% of the respondents are
categorize in this group. 33% of the respondents earn RM 3,001 – RM 4,000
per month follow by 5% of respondents earns RM 1,001 – RM 2,000 per
month. Figure 5.6 shows the distribution of household salary of respondents.
Figure 5.6: Household Salary of Respondents
69
5.2.3
Analysis on Opinion of Respondents to Rates Collection in Manjung
Municipal Council
100 respondents of questionnaire of this study are owner of property that means
that all are owner of property. According to Local Government Act, 1976, the due date
to pay rates is end of February and August every year. From the 100 respondents, there
are 89% of the respondents aware with paying rates every year. 11% of the respondents
do not aware with paying rates every year. Figure 5.7 shows the number of respondents
aware with paying rates.
Figure 5.7: Number of Respondents Aware with Paying Rates
Rates arrear is the owner of property do not pay rates in due time. From the
questionnaires collected, there are 71% of respondents pay rates on time. 29% of
respondents do not pay rates on time.
70
Figure 5.8: Number of Respondents Pay Rates on Time
Race
Total
Malay
Chinese
Indian
Yes
26
43
2
71
No
8
21
0
29
Total
34
64
2
100
Table 5.2: Rates Pay Based on Race of Respondents
Pay Rates
on Time
Table 5.2 show the rates pay by race of respondents. From the 29 respondents
who do not pay rates on time, there are 21 respondents of Chinese do not pay rates on
time. 8 respondents who do not pay rates on time are Malay.
Occupation of
Respondents
Professional
Management
Technical
Businessman
Education
Pay Rates on
Time
Yes
No
3
1
2
2
4
2
13
3
24
14
Total
4
4
6
16
38
71
Security team
4
1
5
Clerk
10
4
14
Self employed
11
2
13
Total
71
29
100
Table 5.3: Rates Pay Based on Occupation of Respondents
Table 5.3 show the occupation of respondents based on whether they are pay
rates on time. From the 29 respondents who do not pay rates on time, there are 14
respondents from education area do not pay rates on time.
There are 36% of
respondents who work in education area does not pay rates on time. There are 4
respondents work as clerks do not pay rates on time. Besides that, 3 respondents work
as businessman do not pay rates on time.
Pay Rates on
Time
Total
Yes
No
RM1001 - RM2000
4
1
5
RM2001 - RM3000
41
16
57
RM3001 - RM4000
23
10
33
RM4001 - RM5000
2
2
4
RM5001 and above
1
0
1
Total
71
29
100
Table 5.4: Rates Pay Based on Household Salary of Respondents
Household Salary
From table 5.4, there are 26 respondents with household salary from RM 2,001
to RM 4,000 do not pay rates on time. So, most respondents with that range household
salary do not pay rates on time based on 29 respondents who do not pay rates on time.
72
Figure 5.9: Reasons of Respondents Do Not Pay Rates on Time
The 29 respondents who are do not pay rates on time with several reasons.
Figure 5.8 show the reasons of respondents do not pay rates on time. From the 29
respondents, there are 10 respondents do not pay rates on time because of forget to pay
rates on time. 7 respondents feel that the place to pay rates are far and need time to go to
the place to pay rates. 6 respondents claim that they are not pay rates on time because
they are receiving the assessment bill late. 4 respondents think that they do not pay rates
on time because of financial problem. They feel that the rates imposed are beyond
affordable. Besides that, there are 2 respondents do not pay rates on time because they
are intension to pay late.
73
Figure 5.10: Satisfaction of Respondents to the Facilities and Services Provided by
Local Authority
One of the main purposes of local authority to impose rates is to provide
facilities and services to public. So, it is very important to Manjung Municipal Council
to provide good facilities and efficient services to rates payers. From the survey, there
are 82% of respondents satisfy with the facilities and services provided by Manjung
Municipal Council while 18% of respondents do not satisfy with the facilities and
services provided by Manjung Municipal Council.
From the questionnaires survey, there are some reasons cause some part of rates
payers do not satisfy with the facilities and services provided by local authority. In their
opinion, the facilities and services provided by local authority still need to be improved.
From the survey from 18 respondents whose are not satisfy with the facilities and
services provided by Manjung Municipal Council, the reasons can be concluded as
follow:
a) The access road to housing area is not well maintained and this is dangerous
to road user when they drive along the road.
74
b) The drainage is clogged and cause unpleasant smell.
c) There are many rubbish dispose along roadside.
Questionnaire is been designed for respondents to rank the factors influenced the
problem of rates collection faced by Manjung Municipal Council. Table 5.2 shows the
average index for each factor influenced the problem of rates collection faced by
Manjung Municipal Council.
The Factor Influenced the Problem
of Rates Collection Faced by
Manjung Municipal Council
Score
The place to pay rates is far (Distance
Problem)
Frequency of Respondents Average
Index
1
2
3
4
5
0
2
7
11
9
3.93
Rates imposed is beyond affordable
1
3
3
14
8
3.86
Services for rates collection is not
efficient
2
3
12
5
7
3.41
Time given is not enough
0
5
14
4
6
3.38
Not understand the need of paying
rates
2
4
8
11
4
3.38
Not receive assessment bill on time
1
8
12
4
4
3.07
Not satisfied with services provided
by local authority
4
7
9
2
7
3.03
Billing service is not good enough
4
3
16
2
4
2.97
Table 5.5: Factors Influenced the Problem of Rates Collection Faced by Manjung
Municipal Council
A scale of 5 categories has been used for the average index method in order to
show priority is discussed in Chapter 3. Based on the results obtained from the 29
sample of questionnaire, respondents agree that the place to pay rates is far which stands
at the average index of 3.93. Besides that, respondents also agree that rates imposed by
local authority is beyond affordable.
75
Based on the results obtained from the 29 sample of questionnaire, respondents
moderately agree the other 6 factors listed above. Respondents moderately agree that
service for rates collection is not efficient and time given to pay rates is not enough. The
29 respondents who do not pay rates on time do not understand the need of paying rates
stands at the average index of 3.38. They do not understand the purpose of local
authority to impose rates. Most people think that rates is same as quit rent. Quit rent is
a form of land tax collected by State Governments. It is imposed on owners of all
alienated land although owners of certain pieces of land such as those used for religious
purpose are exempted from payment. The amount of quit rent varies from state to state
and within each state it also varies according to locality and category of land use.
(Colliers, Jordan Lee & Jaafar, 2006) Besides that, the factor which stands at average
index of 3.07 is respondents do not receive assessment bill for rates assessment on time.
They also moderately agree that they do not satisfied with the facilities and services
provided by local authority which stand at average index of 3.03. Finally, the 29
respondents also moderately agree the billing service for rates assessment is not good
enough which stands at the average index of 2.97.
5.2.4
Analysis of Relationship between Respondents’ Household Salary and Their
Opinion on Rates Imposed is Beyond Affordable
This section is emphasizing the respondents who do not pay rates on time. Table
5.6 below shows that different level of income will represent their affordable rates
imposed.
Household
Salary
Rates Imposed is Beyond Affordable
Very
Disagree
Disagree
Neutral
Agree
Very
Agree
Total
RM1001 RM2000
0
1
0
0
0
1
RM2001 RM3000
0
2
0
9
5
16
76
RM3001 RM4000
1
0
3
3
3
10
RM4001 0
0
0
2
0
2
RM5000
Total
1
3
3
14
8
29
Table 5.6: Relationship between Monthly Income and Affordable Rates Imposed
Most Respondents with salary from RM 2,001 to RM 3,000 per month agree that
the rates imposed by local authority is beyond their affordable.
Besides that, 5
respondents with that income level very agree that the rates imposed by local authority is
high. There are 9 respondents with income level from RM 3,001 to RM 4,000 at least
moderately agree that the rates imposed by local authority is beyond their affordable.
Besides that, there are also 2 respondents with income level from RM 4,001 to RM
5,000 also agree that the rates imposed is high.
5.2.5
Analysis on Ways to Improve Rates Collection System in Manjung
Municipal Council
The second objective of this research is to suggest ways to improve rates
collection system in Manjung Municipal Council to decrease the amount arrears and
recover the amount of arrears. From interview and survey from questionnaire, writer
suggests several ways to improve rates collection system in Manjung Municipal
Council. The ways suggested are as follow:
a) Improve the way to collect rates
Officer in Assessment Department can fix some days to collect rates through
movable counter in every area of MMC. Priority is given to areas which far
from centre payment counter that are building of MMC. Besides that, MMC
77
can open sub-offices at the areas which are far from centre payment counter
for example Pantai Remis, Pulau Pangkor and others.
b) Amend rule to ensure before every holding that is been registered in
document of title must pay rates together with arrears and send a copy
of transfer to local authority
From interview with officer in Manjung Municipal Council, found that the
main problem is some assessment bills cannot reach to owner of property.
Mostly, this will happen when transferring the ownership of property did not
report to MMC office. In this case, owners need to fill Form 1 to report to
Manjung Municipal Council and every transfer process of transferring
ownership will be charged RM 200.00. Some Owner will think that the fees
is high and try to not to fill Form 1. In Kuala Lumpur City Hall, Form I and J
are free of charge to encourage owner of property cooperate with local
authority. (Nor Aswalela Abdullah, 1993) So, writer propose that Manjung
Municipal Council can exempt payment on this form filling to encourage
owner of property cooperate with local authority.
c) Verify the address of owner of property
Manjung Municipal Council can make verify on address of owner of property
from Land and Mines Office, Tenaga Nasional Berhad, Jabatan Bekalan Air.
This is done to make sure the exact address of owner of property is complete
before Assessment Department send out assessment bills.
d) Improve the services provided to public
One of the main purposes of local authority to impose rates is to provide
facilities and services to public.
So, it is very important to Manjung
78
Municipal Council to provide facilities and services that can meet satisfaction
of rates payers.
e) Improve the way to send bills and notices
Manjung Municipal Manjung will send out the assessment bills and notices
by post to owner of property. To ensure the assessment bills and notices
reach to owner, bills and notices need to be sent through post with acceptance
clarify letter post like has been committed by Kuala Lumpur City Hall.
5.3.5
Conclusion
One of the main purposes of local authority to impose rates is to provide
facilities and services to public. Assessment rates have been the most lucrative source of
revenue. (Mohd. Zin Mohamed, 1998) So, it is very important to identify the factors
influenced the problems of rates collection system to suggest ways to improve the rates
collection system in Manjung Municipal Council.
Based on the result obtained from questionnaires, respondents agree that rates
collection system in Manjung Municipal Council need to be improved. Writer also
suggests five ways to improve rates collection system in Manjung Municipal Council. It
is hope that the two objectives of this research can be achieved and can increase the
revenue from assessment rates in Manjung Municipal Council.
The last chapter of the dissertation will tabulate all findings to achieve the
objectives of the study. A conclusion will be draft to summarize the important findings
and recommendations will be suggested to improve rates collection system in Manjung
Municipal Council.
79
CHAPTER 6
CONCLUSION AND RECOMMENDATION
6.1
Introduction
Analysis of the data to achieve the two objectives of this study has been
discussed in previous chapter.
So, identification of problem the problem of rates
collection faced by Manjung Municipal Council and suggestion of ways suggested to
improve it has been carrying out.
This last chapter of the dissertation will tabulate all findings to achieve the
objectives of the study.
It included the literature review and findings of the
questionnaire survey that has been carried out in chapter 5. A conclusion will be draft to
summarise the important findings and recommendations will be suggested to improve
rates collection system in Manjung Municipal Council.
6.2
Discussion of Findings
The information obtained through earlier literature study in Chapter 2 and the
results from the questionnaire distribution for questionnaire survey of the owner of
property in Manjung Municipal Council have fulfilled the objective of the study.
80
In this study, eight possible factors that could influence the problem of rates
collection system in Manjung Municipal Council were identified. The eight factors are
rates imposed is beyond affordable, time given is not enough, service for rates collection
is not efficient, billing service is not good enough, distance problem, not satisfy with
services provided by local authority, not understand the need of paying rates and not
receive assessment bill on time. From the factors listed, rates imposed is beyond
affordable and distance problem were agreed by the respondents that could influence the
problem of rates collection system with the average index of 3.86 and 3.93 rating scale.
Another six factors were moderately agreed by the respondents to be the factors
influence the problem with the average index of ranging from 2.97 to 3.41 rating scale.
This study also have identified that the highest rank of factors that influence the
problem of rates collection system were, distance problem with average index of 3.93
rating scale, followed by problem of rates imposed is beyond affordable with average
index of 3.86 rating scale and the third was the service for rates collection is not efficient
with average index of 3.41 rating scale.
As a conclusion to the study, the objectives of the study and findings will be
reviewed as a resolution of the objectives. There were two (2) objectives to be achived
in the study and further details on the individual findings and an overall outcome as the
general conclusion to summarise the entire study.
Objective 1:
To indentify the factors influenced the problems of rates collection faced by Manjung
Municipal Council.
Table 6.1 below showed the summarized of the eight factors that influence the
problem of rates collection system in Manjung Municipal Council with average index
respectively.
81
The Factor Influenced the Problem
Average
of Rates Collection Faced by
Index
Manjung Municipal Council
The place to pay rates is far (Distance
Problem)
3.93
Rates imposed is beyond affordable
3.86
Services for rates collection is not
efficient
3.41
Time given is not enough
3.38
Not understand the need of paying
rates
3.38
Not receive assessment bill on time
3.07
Not satisfied with services provided
by local authority
3.03
Billing service is not good enough
2.97
Table 6.1: Factors Influenced the Problems of Rates Collection Faced by Manjung
Municipal Council.
Objective 2:
To identify the ways to improve rates collection system and overcome the problem of
rates arrear in Manjung Municipal Council.
In order to improve rates collection system in Manjung Municipal Council, some
recommendations are listed below:
a) Improve the way to collect rates.
b) Amend one uniform rule to ensure before every holding that is been
registered in document of title must pay rates together with arrears and send a
copy of transfer to local authority.
82
c) Verify the address of owner of property.
d) Improve the services provided to public.
e) Improve the way to send bills and notices.
6.3
Recommendation
Due to the time constraint in preparing for the research work, therefore, there are
still some rooms for further improvements of this research work. Further improvement
and development of this study is possible especially in the following areas:
6.4
I.
The Scope of the study can expand to other location.
II.
To compare local and foreign rates collection system.
Conclusion
The objectives of this study were achieved by identification of the important
factors that have influenced the problem of rates collection system in Manjung
Municipal Council. Recommendations on the improvement of the problem faced were
also discussed after the analysis of the findings was done.
83
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Jordan
Lee
&
Jaafar
(2006),
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Lee
&
Jaafar
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(2009),
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Manjung
(2008),
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and
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87
UNIVERSITI TEKNOLOGI MALAYSIA
FACULTY OF GEOINFORMATION SCIENCE AND ENGINEERING
DEPARTMENT OF PROPERTY MANAGEMENT
TITLE:
RATES COLLECTION SYSTEM FOR MAJLIS PERBANDARAN
MANJUNG
QUESTIONNAIRE
PREPARE BY:
NAME
ID NUMBER
MATRIC CARD NO.
COURSE
SUPERVISOR
SESSION
: LEE HAN WEI
: 851208-08-5898
: MG081040
: MASTER OF SCIENCE IN REAL ESTATE
: DR. MEJAR AHMAD ARIFFIAN BIN HJ BUJANG
: 2008/2009
88
SECTION A: GENERAL INFORMATION
All information to be given will remain confidential and used for this study only.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Sex
a. Male
Race
a. Malay
b. Female
b. Chinese
c. Indian
Age
a. 20 – 25
b. 26 – 30
c. 31 – 35
d. 36 – 40
e.
f.
g.
h.
Married Status
a. Married
b. Single
Employment Sector
a. Government
b. Private
Type of Employment
a. Professional
b. Management
c. Technical
d. Businessman
e.
f.
g.
h.
d. Others
41 - 45
46 - 50
51 - 55
56 and above
Education
Security Team
Clerk
Self Employed
Status of Employment
a. Full Time
b. Permanent
c. Contract
Education Background
a. Primary
b. Secondary (PMR, SPM)
c. Diploma
d. Degree
e. Master Degree
f. PHD
Household Salary
a. Below RM 1,000
b. RM 1,001 – RM 2,000
c. RM 2,001 – RM 3,000
d. RM 3,001 – RM 4,000
e. RM 4,001 – RM 5,000
f. RM 5,001 and above
89
SECTION B: RATES ASSESSMENT
All information to be given will remain confidential and used for this study only.
1.
House occupied by tenant or owner?
a. Tenant
b. Owner
2.
The due date to pay rates is end of February and August every year.
Do you alert with paying rates?
a. Yes
b. No.
If you are tenant, please answer question 3 and 4
If you are house’s owner, please answer question 5 and 6
3.
Do you pass assessment bill to property’s owner?
a. Yes
b. No
4.
Why you do not pass assessment bill to property’s owner?
a. Does not receive bill
b. Late receive bill
c. Cannot contact owner
d. Forget / Do not know about it
5.
How many year(s) did you own your property?
90
6.
How many year(s) you been pay for property tax (rates)?
7.
Do you pay bill on time?
a. Yes
b. No
8.
If no, why?
a. Forget
b. Late receive assessment bill
c. Intention to pay late
d. Time problem
e. Distance problem
f. Financial problem
9.
Do you satisfy with the facilities and services provided by local authority?
a. Yes
b. No
10.
If no, why?
91
To answer question 11, please choose the relevant answer
1 – 5 scale have the following meaning:
1
2
3
4
5
very disagree
disagree
neutral
agree
very agree
11.
Please comment statement below:
a.
Rates imposed is beyond affordable
1
2
3
4
5
b.
Time given is not enough
1
2
3
4
5
c.
Services for rates collection is not efficient
1
2
3
4
5
d.
Billing services is not good enough
1
2
3
4
5
e.
The place for pay rates is far (Distance problem)
1
2
3
4
5
f.
Not Satisfied with services provided
1
2
3
4
5
g.
Not understand the need of paying rates
1
2
3
4
5
h.
Not receive assessment bill on time
1
2
3
4
5
92
93