Motor vehicle tax (PKB) is an important source of Own-Source Revenue\n(PAD) for provincial governments. The amount collected is influenced,\namong other things, by the number of vehicles registered in a\nregion.<\/p>\n
Regions with large populations and vehicle fleets have relatively\nbroad tax bases. However, as vehicles become easier to move between\nregions, a fundamental question arises: is a collection system based\nentirely on registration location still relevant to current patterns of\nmobility?<\/p>\n
That question is increasingly important as some regions face pressure\non motor vehicle tax revenues. In Central Java, for example, audited\n2025 financial statements recorded PKB receipts of about Rp3.96\ntrillion, down from Rp5.47 trillion in 2024.<\/p>\n
At the same time, PKB arrears in 2025 stood at about Rp2.44 trillion,\nbelow the Rp2.90 trillion recorded the previous year. The decline in\narrears should be considered in light of the write-off of receivables,\nand does not necessarily indicate improved payment compliance.<\/p>\n
Lower PKB revenue can be caused by various factors, from changes in\nnew vehicle sales and tax policy to household finances and compliance\nwith annual tax payments.<\/p>\n
Incentives for electric vehicles can also affect the amount\ncollected, although their impact needs to be assessed alongside changes\nin vehicle numbers and the policies in force. Revenue contraction,\ntherefore, cannot be explained by a single factor.<\/p>\n
Beyond these factors, a structural issue merits attention: vehicle\ntax collection administration still relies heavily on where a vehicle is\nregistered. Yet registration location does not always reflect where a\nvehicle is used day to day. This mismatch should be reviewed,\nparticularly as people and vehicles become more mobile.<\/p>\n
When Vehicles Move Beyond Administrative Boundaries<\/p>\n
Annual vehicle tax obligations differ from charges incurred when\nsomeone buys a new vehicle. In a new vehicle transaction, various\nadministrative obligations are generally settled during the purchase and\nregistration process.<\/p>\n
Annual tax, by contrast, is a recurring obligation that vehicle\nowners must meet. When household finances deteriorate, that payment may\ncompete with other needs considered more urgent.<\/p>\n
A further issue arises in second-hand vehicle transactions. The\nobligations and administrative costs associated with transferring\nownership or moving a vehicle\u2019s registration can add to the buyer\u2019s\nexpenses. Local policies that waive or reduce certain fees may help, but\ndo not necessarily resolve all administrative difficulties. Some people\ncontinue using a vehicle they have bought without promptly updating its\nregistration details.<\/p>\n
Population mobility complicates matters further. Statistics Indonesia\n(BPS) uses the term \u201crecent migrant\u201d for a person whose current province\nof residence differs from the province where they lived five years\nearlier. Data on households with recent migrants can indicate that a\nchange of residence may be accompanied by the transfer of assets,\nincluding motor vehicles. A vehicle already owned in the place of origin\nmay not be immediately replaced with a new one after a family moves.<\/p>\n
Although the proportion of households with recent migrants is\nrelatively small\u2014about 2.3%, according to the data considered in this\ndiscussion\u2014such mobility remains relevant to the design of tax\nadministration.<\/p>\n
That figure is not a direct measure of vehicle movements, but it\npoints to household relocation that could affect where assets are used.\nBuying a new vehicle in the destination region may not be a priority if\na family already has one from its place of origin.<\/p>\n
Commuting presents a different challenge. Someone might live in Bogor\nand use one motorbike to reach a local station, then continue the\njourney by KRL commuter train.<\/p>\n
At their destination, they use another motorbike, parked near the\nstation, to get to work. On the return journey, the second vehicle is\nleft at the destination station, while the trip home continues by KRL\nand the first motorbike.<\/p>\n
In this pattern, one person\u2019s two vehicles are routinely used in\ndifferent regions, without any change of residence. It shows that an\nowner\u2019s residence, a vehicle\u2019s registration location and its place of\nuse can all be different.<\/p>\n
This situation does not automatically indicate a tax offence.\nHowever, if all administration and revenue allocation depend solely on\nregistration location, the system may fail to reflect actual vehicle\nmobility. The issue is not simply whether a vehicle is legally\nregistered, but whether the administrative system can accommodate\npatterns of use that cross regional boundaries.<\/p>\n
Integrating Collection and Revenue-Sharing<\/p>\n
The solution to consider is not simply raising tax rates or expanding\nenforcement. Local governments should begin building a nationally\nintegrated PKB collection system. This need not mean transferring local\ntax powers to central government. Provincial governments would retain\ntheir powers under the applicable rules, while administrative and\npayment systems across regions would be connected.<\/p>\n
The first step would be to allow vehicle tax to be paid from\nanywhere, without requiring taxpayers always to visit a tax office in\nthe vehicle\u2019s registration region. For example, a vehicle registered in\nCentral Java could have its tax paid at a service office in another\nprovince. The payment would still be recorded in a system linked to the\nvehicle\u2019s data and the local government entitled to receive the\nrevenue.<\/p>\n
This convenience matters because the location of a service office\nshould not obstruct the fulfilment of tax obligations. Integration could\nalso reduce the time and travel costs involved, particularly for people\nwho live or work far from the region where their vehicles are\nregistered.<\/p>\n
The second step is to consider a revenue-sharing mechanism between\nthe registration region and the region where a vehicle operates.\nRegistration location has so far been the main basis for tax\nadministration. In future, it should be assessed whether some revenue\ncould also be allocated to the region where a vehicle is used\nregularly.<\/p>\n
Where a vehicle is registered and operated in line with its owner\u2019s\nresidence, all PKB revenue would go to the relevant region. But where\nthe registration location differs from the place of operation, a\nmechanism for sharing revenue between the two regions should be\nconsidered.<\/p>\n
A 50:50 formula could serve as an initial illustration. Part of the\ntax calculation would be based on the registration region\u2019s index, while\nthe remainder would take account of the vehicle\u2019s operating region. This\nis not a final formula to be applied uniformly. A fair allocation should\nbe tested through simulations that consider vehicle characteristics,\nuser mobility, administrative costs and each region\u2019s contribution.<\/p>\n
Determining where a vehicle operates presents a technical challenge.\nNot every vehicle passing through a region can be considered to operate\nthere. A vehicle that passes through occasionally is different from one\nused every day to commute to work or conduct economic activity in\nanother region. Clear operational definitions and verification\nmechanisms are therefore needed, without creating excessive\nadministrative burdens.<\/p>\n
Expanding Enforcement and Improving Data<\/p>\n
An integrated system would also create opportunities to broaden\nenforcement against late tax payments. With connected data, officers\ncould verify a vehicle\u2019s tax status without relying on whether it is\nregistered in their region.<\/p>\n
Enforcement would still have to follow the relevant powers and legal\nprocedures, but inter-regional coordination could reduce information\ngaps that non-compliant taxpayers might exploit.<\/p>\n
Fiscal incentives could also be designed so that the local government\nwhere a vehicle operates receives a share of the tax revenue collected,\neven if the vehicle is registered elsewhere. This would encourage every\nregion to help monitor vehicles and collect tax, regardless of where\nthey were registered.<\/p>\n
As a result, a region\u2019s fiscal interests would no longer depend\nsolely on vehicles registered within its own boundaries. Inter-regional\ninvolvement is expected to broaden collection, improve taxpayer\ncompliance and curb tax avoidance through the exploitation of\nadministrative boundaries.<\/p>\n
Another important benefit would be more reliable data on asset\nownership for tax purposes. In practice, a person may use someone else\u2019s\nidentity to register a motor vehicle.<\/p>\n
For example, a Jakarta identity-card holder who buys a vehicle in\nSemarang might use a local resident\u2019s National Identification Number\n(NIK) to register it there. The vehicle would then be registered under\nsomeone else\u2019s identity, even though it is actually owned and used by\nthe buyer.<\/p>\n
Such nominee arrangements can create problems when vehicle data are\nmatched against annual income tax returns. The Directorate General of\nTaxes (DJP) may find it difficult to identify a vehicle as part of a\ntaxpayer\u2019s assets if the NIK on the registration differs from the one\nused in their tax return.<\/p>\n
Integrating vehicle and tax administration, alongside better\nverification of owner identities, could narrow this information gap.\nSystem integration would therefore benefit not only PKB collection, but\nalso the accuracy of asset data in tax administration.<\/p>\n
There are, of course, risks to consider. Revenue-sharing could alter\nthe distribution of PAD between regions, particularly where tax rates\nand tax bases differ. Differences in rates could also prompt owners to\nregister vehicles in lower-tax regions while continuing to operate them\nin the original region. If left unaddressed, this practice could shift\nthe revenue base without any corresponding change in where vehicles are\nactually used.<\/p>\n
Integration must therefore be accompanied by mechanisms to verify\noperating locations and prevent registration changes made solely to\nsecure a lower tax burden. Cross-regional revenue flows would also\nrequire clear procedures for reconciliation, resolving discrepancies and\noversight. Implementation should be preceded by fiscal simulations and\npilots in areas with high levels of inter-regional vehicle mobility.<\/p>\n
Why Must Administration Keep Pace with Asset Mobility?<\/p>\n
From the perspective of accounting and asset management, motor\nvehicles differ fundamentally from land and buildings. Land and\nbuildings are fixed assets tied to a specific physical location, whereas\nmotor vehicles are movable goods that can travel according to their\nowners\u2019 needs. This characteristic should be taken into account when\ndesigning vehicle tax administration.<\/p>\n
It makes little sense for vehicle mobility to be addressed by\nrequiring owners to change their administrative residence. Migrant\nworkers and commuters who live in one region and work in another\u2014whether\nthey travel daily, weekly or monthly\u2014should not have to change their\nidentity cards merely to meet tax obligations in the relevant place.<\/p>\n
Administrative systems should accommodate asset mobility without\nmaking a change of residence the main prerequisite. Cross-regional\npayment integration and revenue-sharing based on registration and\noperating locations offer a way to achieve this. Tax obligations would\nstill be met, local government powers respected, and revenue allocated\nwith regard to how vehicles are actually used.<\/p>\n
This reform would not guarantee an immediate increase in revenue. Its\nresults would depend on policy design, data quality, incentives between\nregions and enforcement. But retaining a fragmented system would mean\nallowing coordination problems and information gaps to persist.<\/p>\n
In an era of increasingly sophisticated information technology, the\nquestion is no longer whether this can be done, but whether there is the\nwill to try a new approach to optimising one of the main sources of\nPAD.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/evaluating-the-motor-vehicle-tax-collection-system-1793350334", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }