City cancels tax hike for vehicles made before 1996

JAKARTA (JP): Bowing to widespread protest, albeit in part, the city administration announced on Friday that vehicles produced before 1996 would be exempt from the tax hike, except sedans and jeeps.

Head of City Revenue Agency Deden Supriadi said tax increases for sedans and jeeps which were produced before 1992 were also canceled.

"After evaluating the current situation, including public demands, we decided to review the tax increase," Deden told reporters at City Hall.

He said vehicles, including motorcycles, which enjoyed the privileges were mostly owned by ordinary people.

The decision will take effect on Monday.

"Those who have paid according to the new tax regulation, will have the difference refunded and credited to their tax payment next year," Deden said.

The controversial decree no. 33/2001 on vehicle and change of ownership taxes increased the taxes to between 80 percent and 100 percent.

Deden said vehicles which would be exempt from the hike would fall under the old gubernatorial decree 67/2000, which increased vehicle tax by up to 30 percent compared with the tax imposed on vehicle owners during the 1999/2000 fiscal year.

Deden insisted that the review was a response to public demand, irrespective of a reprimand from the Ministry of Home Affairs and Regional Autonomy.

The ministry had warned the city administration that it had 90 percent violated the ministerial decree on the tax by increasing vehicle prices.

The ministry set the vehicle prices at 30 percent below the market prices, while the city administration made it 20 percent below the market.

Deden also said the city administration planned to value luxury cars above market prices in order to increase their taxes. He did not elaborate, however.

Governor Sutiyoso had questioned the home affairs ministry decision to value a Ferrari sedan at only Rp 1.7 billion (US$154,545), while the real price is Rp 3.3 billion.

He said under the new regulations, an owner of the Italian car would pay Rp 36 million in vehicle tax, instead of the current Rp 25 million.

Asked whether the review would affect the target of city revenue from taxes in the current fiscal year, Deden said on Friday that the agency would continue intensifying tax collection.

"We call on people whose cars have yet to be registered, to do it and pay their taxes," he said.

There are 1.9 million registered vehicles, including about 900,000 motorcycles and 350,000 sedans.

The city has set its sights on securing Rp 2 trillion from vehicle and change of ownership taxes this year.

Vehicle tax is set at 1.5 percent of vehicle prices, which are set out in a gubernatorial decree every year.

Change of ownership tax is set at 10 percent of the vehicle price for new ones and 2.5 percent for old ones. (jun)