Progressive car taxation system to be revoked<\/p>\n
JAKARTA (JP): City residents and companies who own more than
\none vehicle will soon no longer have to pay tax on them at rates
\nof between 20 percent and 100 percent higher than the standard
\nvehicle tax rates.<\/p>\n
The three-year-old progressive vehicle taxation system is to
\nbe revoked from Apr. 1 as the administration has found it an
\nineffective way to increase local tax revenue, city councilor
\nAmarullah Asbah said yesterday.<\/p>\n
The proposed regulation to revoke the system, still being
\nrevised jointly by the City Council and the administration, is
\nexpected to be ready by March.<\/p>\n
\"With the completion of the new regulation, we will revoke the
\nsystem beginning April 1 this year,\" he said.<\/p>\n
Amarullah, who is head of Commission C for finance affairs,
\nsaid the progressive car taxation system had many loopholes that
\nhad been manipulated by those who owned more than one car.<\/p>\n
\"Since the implementation of the rules three years ago, many
\nparties who owned more than one car manipulated the rules by
\nusing, for example, the names of their relatives for their
\nadditional vehicles so they could avoid paying the tax.<\/p>\n
We, therefore, considered that the progressive system has not
\nworked as well as expected,\" he said.<\/p>\n
Under City Bylaw No.4\/1994, which was approved by the City
\nCouncil in July 1994 and became effective on April 1, 1995,
\nvehicle owners are required to pay 120 percent of the tax rate
\nfor a second vehicle, 140 percent for the third, 160 percent for
\nthe fourth, 180 percent for the fifth and 200 percent for the
\nsixth and subsequent vehicles.<\/p>\n
The progressive car taxation system was originally designed to
\nincrease the city's revenue and to slow the growth in the number
\nof private cars as a way to solve the capital's burgeoning
\ntraffic problems.<\/p>\n
However, after three years of implementation, there has been
\nno significant change in the capital's traffic congestion.<\/p>\n
The number of vehicles currently clogging the city is 2.79
\nmillion.<\/p>\n
The progressive tax policy sparked controversy three years
\nago, as many people said that it would be meaningless because
\nmost rich people (who owned cars) would always find loopholes in
\nthe regulations and try to break the law.<\/p>\n
The tax is also considered a burden on middle class people, as
\nit affects them too.<\/p>\n
Amarullah estimated the city's revenue from tax on motorized
\nvehicles and the first transfer of vehicle ownership (BBN-KB) in
\nthe ongoing 1997\/1998 fiscal year would amount to some Rp 197.4
\nbillion (US$13.16 million), which is about 11.5 percent of
\nJakarta's total revenue.<\/p>\n
He gave no figures for the previous fiscal year in which the
\ncity's total revenue was Rp 2.8 trillion.<\/p>\n
Once the progressive vehicle taxation is eased, the tax will
\nbe lowered from 5 percent to 1.5 percent of the price of the car
\nand the tax on vehicle ownership transfer (for the second owner)
\nwill be lowered from five percent to only 1 percent, he said.<\/p>\n
\"The progressive tax is only effective for new cars ... but
\nactually the biggest section of the car market is for second-hand
\ncars. So hopefully this new revision will encourage people to
\nprocess the documents using their own names and, therefore, the
\ncity will receive more money,\" he said.<\/p>\n
\"Lets hope that the revision will do a lot of good for the
\nresidents and the municipality,\" he added. (edt)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/progressive-car-taxation-system-to-be-revoked-1447893297",
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