City Council set to endorse new by-law on fuel tax
JAKARTA (JP): City Council is preparing to sign a new by-law ratifying the city administration's plan to collect a 5 percent tax from state oil and gas firm Pertamina on sales of automotive diesel and fuel in the capital.
"We'll sign Monday the 1998 City By-law No. 6 on Fuel Tax," head of the United Development Party faction Ahmad Suaidy told reporters yesterday.
Councilors hailed the administration's plan, which was announced Tuesday by deputy governor for economic and financial affairs Harun Al Rasyid.
Councilors argued earnings from the proposed fuel tax would help the administration boost its locally generated revenue, projected to plummet this fiscal year due to the crisis.
"The amount of earnings to be collected from the fuel tax is estimated to reach about Rp 200 billion to be contributed for the ongoing 1998/99 fiscal year, which would be very helpful for the administration," said head of Commission C for finance and revenue affairs Amarullah Asbah.
On Tuesday, Harun said the city administration discussed the plan with Pertamina, the Ministry of Home Affairs and the Ministry of Finance recently.
"Hopefully, we'll be able to collect the fuel tax from Pertamina starting with sales this month," Harun said.
The administration, he added, hoped the procedure for tax collection from Pertamina would not be difficult.
"There's an ongoing discussion on that."
Councilors were also happy with the plan because the 5 percent tax will not be added on to existing prices.
But Harun's projection on the tax's contribution to the administration's revenue was far less than Amarullah's.
He estimated it would contribute only between Rp 50 billion and Rp 70 billion for the current fiscal year but he did not explain his calculation.
Burdening
Pertamina president Soegianto recently lamented the company's burden of unpaid debts from clients, including about Rp 12.1 trillion due to be paid by the government to reimburse Pertamina's fuel subsidies.
For the administration, the fuel tax will be a welcome contribution to its bare-bones Rp 1.3 trillion budget.
"Well, now that we can get new income to be added to our tight revenue, the administration can breathe again," Harun said.
It may prove to be a lucrative income source to compensate for the plunge in the city's revenues following the implementation of 1997 Law No. 18, which slashed tax earnings to nine categories from 42 and levies to 30 from 192.
Harun said the administration was also looking into other possible tax income, such as that on land transactions.
"This tax requires the parties who sell and buy the land to each pay to the administration 5 percent of the total transaction value."
Harun estimated taxation on land sales could contribute at least Rp 70 billion a year to the administration's revenue. (cst)