City Council okays draft changes to vehicles bylaws

JAKARTA (JP): The City Council approved yesterday the drafts of two city bylaws which will revoke the progressive vehicle taxation system and significantly reduce tax for cars and vehicle ownership transfer.

After several revisions were made to the Vehicle Taxation (PKB) and Tax on Vehicle Ownership Transfer (BBN-KB) drafts, the bylaws were read out by Speaker Edy Waluyo during a plenary session.

Council's approval was apparently fast-tracked as it was initially scheduled to be ready in March.

The proposed regulations will be handed over to the governor, who must review and submit them for approval to the minister of home affairs, before ratifying the bylaws.

The bylaws are expected to be effective as of April 1.

Under the proposed regulations, the PKB -- the tax that should be paid by car owners -- will be lowered from 5 percent to 1.5 percent of the price of vehicles.

The BBN-KB tax rate for subsequent vehicles is to be reduced from 5 percent to 1 percent of the vehicle's price.

Under the existing bylaw -- which City Council approved in July 1994 and became effective on April 1, 1995 -- vehicle owners are required to pay 120 percent of the national tax rate for a second vehicle, 140 percent for the third, 160 percent for the fourth, 180 percent for the fifth and 200 percent for the sixth and subsequent vehicles.

The progressive car taxation system was originally designed to boost city revenue and discourage private car ownership in a bid to solve the capital's burgeoning traffic problems.

The city administration decided to revoke the system as it did not increase local tax revenue and owners of more than one car took advantage of loopholes.

For example, multiple-vehicle owners used the names of relatives for additional vehicles to avoid paying tax.

Under the new draft, which consists of 21 chapters and 41 articles, the PKB tax rate calculation will be based on various measurements, including the price, age and several technical aspects of the vehicles.

The weight of a vehicle is also taken into account because of the additional damage it may cause to the roads and environment.

Owners of large vehicles will no longer have to pay the BBN- KB, while individuals and corporations operating ambulances, hearses and fire engines will pay less than half of the new rate under the proposed bylaws.

City Revenue Office has been empowered to send a final notice to owners who fail to pay the tax on time.

City Council members said yesterday the draft bylaws would help boost city revenue from PKB and BBN-KB, which is expected to reach Rp 197.4 billion in the 1997/98 fiscal year -- about 11.5 percent of Jakarta's total revenue.

The capital currently has 2.67 million vehicles.

Councilors from the United Development Party (PPP), the ruling Golkar and the Armed Forces factions said the PKB regulation, for instance, was environmentally friendly as the tax rate was based on a vehicle's capacity to damage the environment.

Members of the Indonesian Democratic Party (PDI) reminded the city administration to continue its efforts to eliminate corruption and improve the city's traffic management system.

"One of the current obstacles in improving city revenue stemming from vehicles is bureaucratic complexity," the party said in a release. (ind)