Q.
(a) Explain the differences between 'Contribution in Aid of Rates' and Rating. (10 marks)
(b) Additional Premium will be imposed if the State Authority approves application to any changes to the existing categories in the title. Explain the meaning of additional premium with suitable examples. (15 marks)
(25 marks, 2016 Q1)
A.
a)
CAR or Contribution in Aid of Rates is explained below.
Where holdings within a Local Authority are owned by the Federal or State Government or their agencies, a contribution is paid by the Federal or State Government to the Local Authority in lieu of the rates leviable on such properties.
The role of JPPH is to certify the value placed on the holdings for this purpose by the Local Authority.
Ref:
https://www.jpph.gov.my/V2/program_detail.php?versi=1&kod_program=2&tjk=CONTRIBUTION%20IN%20AID%20OF%20RATES%20(CAR)
Rating is according to Local Government Act 1976 as:
S.127. 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.
In other words, Rating is how a local authority obtain taxes from the buildings to enable it to carry out maintenance of the services like street lighting, rubbish disposal, drainage cleaning, upkeeping of public places like parks, community halls and religious centres (surau).
Contribution in AID of Rates (CAR) is in fact, a way the Local Authority charges the State Government or the Federal Government on the buildings used by the respective parties in the local constituency. As State and Federal Government has buildings which are not really operated as commercial offices, the rating for such buildings is different from the normal calculation. Such special rates is CAR.
For example, State Government has the Jabatan Kerja Raya building in Kuching City South. The rating for this building is a CAR. Similarly, Federal Government has Hospital Umum Sarawak, a Federal Ministry of Health building in Kuching, thus a rating is used to charge the services to the Federal Ministry.
Ref:
S.176 Local Government Act, 1976.
JPPH website on definition of CAR.
Own account.
How to calculate the additional premium when a land is converted from its original category to another category? In case of Sarawak, how is it calculated?