The Perak government must roll back its new tax on property development as it only serves to boost state coffers while sharply inflating house prices, the state DAP head said.

Ngeh Koo Ham (right) said the tax requires developers to pay a quarter of the total appreciation in land value after its conversion to housing or commercial development. It was implemented as part of the Town And Planning Act 1976 with effect from Jan 1.

"It will be impossible for low- and medium-low cost houses to be built in view of the new development charge. I call on the Perak government to abolish it immediately,” he said in a statement.

By his back of the envelope calculations, Ngeh estimates that house prices could rise by RM50,000 to RM100,000 if developers pass on the full cost to buyers.

Developers would also be unwilling to build low-and medium-cost houses, as the price is set from RM42,000 to RM72,000 per unit.

"This makes it the biggest burden Perakians will have to bear in the increasing environment of rising prices," Ngeh added.

Ngeh also charged that the state government is becoming greedy, given that annual revenue had risen by more than 50 percent to RM900 million last year from about RM600 million in 2008.