Central Java Secretary Says EV Tax Incentives and Reduction in Smoker Numbers Erode Regional Revenue

Semarang – The Secretary of Central Java Province (Jateng), Sumarno, assesses that several central government policies have the potential to erode regional original revenue (PAD). In the context of Central Java, he mentioned, among others, the tax incentives provided by the government for electric vehicles and efforts by the government to reduce the national smoking rate.

Sumarno revealed that 80 percent of the Central Java Provincial Government’s PAD comes from taxes or is consumption-based. These include Motor Vehicle Tax (PKB) and Motor Vehicle Ownership Transfer Fee (BBNKB), Motor Vehicle Fuel Tax (PBBKB), and cigarette tax. Sumarno stated that these tax components are correlated with district/city governments.

“The PKB and BBNKB have options, while the fuel tax and cigarette tax involve revenue sharing funds,” said Sumarno on Sunday (5/4/2026).

According to Sumarno, these taxes are a mainstay for local governments in collecting PAD. However, he assesses that there are several central government policies that have the potential to erode PAD for local governments, especially in Central Java.

Sumarno alluded to how the central government is actively encouraging the public to use public transportation or switch to electric vehicles. “Electric vehicles have zero percent PKB and BBNKB,” he said.

He added that the shift to electric vehicles will certainly reduce fuel purchases. “The central policy is to encourage reducing fuel consumption, even shifting to electric vehicles. Of course, if we are asked to accelerate (PAD), it will instead decline, because it also contradicts the central government’s policy,” said Sumarno.

In the health sector, Sumarno alluded to the government’s efforts to reduce the number of active smokers. “The cigarette tax is conceptualised to reduce it, and at some point, the Ministry of Health wants to ban it. So how do we want to accelerate PAD when this contradicts the central policy,” he said.

Sumarno admitted that he had conveyed this during Commission II of the DPR RI’s working visit to the Central Java Governor’s Office on Wednesday (1/4/2026). “I conveyed it to Commission II so that it can be discussed at the centre because this is about the Regional Financial Balance Law. Thus, the local fiscal capacity will certainly not be disrupted,” he said, while hoping for a solution from the centre regarding the issue.