City administration plans tax increase on luxury cars

City administration plans tax increase on luxury cars

JAKARTA (JP): The city administration and Jakarta Police are
working out details of tax increases for luxurious imported cars
with no local content.

No details were given on the percentage increase or when the
new taxes would be applied as city officials said that the tax
scheme was still being calculated.

The decision to increase various vehicle taxes looks to be an
attempt by the city administration to build on the tremendous
windfall they achieved this year.

Vehicle taxes have become the largest contributor to city
revenues, providing about a quarter of the Rp 4.05 trillion
revenues in the 2000 budget.

Governor Sutiyoso, after officially opening the Vehicles
Document Services Office at Jl. Daan Mogot, West Jakarta, on
Friday said: "It is only logical that those who can afford to
purchase luxury cars pay more taxes."

In the future, the city will no longer issue temporary
registration numbers, identified by the white license plates.

Such temporary license plate numbers, are issued by the
vehicle document services office while motorists process their
vehicle documents.

"We plan to stop issuing temporary vehicle registrations
because they provide cars owners with the opportunity to avoid
paying their vehicle tax," Sutiyoso added.

While substantial earnings were achieved from vehicle taxes,
Sutiyoso said the city administration and police would continue
to crack down on anyone violating vehicle tax rules.

"All violators will be punished, including officials that try
to misappropriate tax revenues. We will take stern measures
because sometimes in the past revenues have gone into certain
officials' pockets," Sutiyoso said.

Jakarta Police Chief Insp. Gen. Mulyono Sulaiman said the
police would support efforts by the city administration to
control the vehicle registration process.

"I have ordered my subordinates to arrest anyone, including
officials, who violates the rules in the vehicle registration
process," Mulyono added.

The city administration was pleasantly surprised when it
discovered it had raked in an unexpected surplus of Rp 669.7
billion (US$77 million) in the current budget term.

Revenues collected from fees on changing vehicle ownership
registration rose by 97 percent or Rp 290.69 billion, while
vehicle tax revenue rose by 10 percent or some Rp 35.88 billion.

Even before the new tax rates are imposed, the city
administration estimates revenues of some Rp 1 trillion in
financial year 2001 from some 1.9 million vehicles in the
capital.

The increase is attributed to increased revenues from vehicle
taxes, especially from luxury and imported cars.

The government revoked in June its policy of prohibiting the
import of completely built-up (CBU) vehicles and luxury vehicles
that seat fewer than 10 people.

The ban was also lifted on imported automobiles which have
engine capacities up to 4,000 cc and a price of more than
US$40,000. (dja)