City denies link between new tax decrees and subway
JAKARTA (JP): Jakarta is the most developed province in Indonesia. It has high-rise buildings, a multitude of nightspots, malls and inner-city toll roads.
It also has lingering traffic woes.
The administration plans to build a Mass Rapid Transit (MRT) system next year, which will connect Blok M in South Jakarta and Kota in West Jakarta. A presidential decree on the project has yet to be issued.
Little has been revealed of how much the US$1.5 billion project will cost the public. There have been suggestions of introducing congestion charges in which motorists would be charged Rp 1,500 to Rp 3,000 on roads along the subway route during peak hours.
The 14.5-kilometer underground subway is expected to ease traffic congestion. Material losses caused by air pollution, largely caused by vehicle emissions, is estimated at US$600 million a year.
With each year of delay, the MRT project will become more and more expensive.
A consortium of Indonesian, Japanese and German companies was set up to raise $8 million for the basic design.
The rest of the project must be funded by private businesses and the public.
In April a working group of the project suggested the administration introduce various taxes to increase city revenue and finance Jakarta's first subway system.
Decrees on many of the taxes already exist but have not been enforced.
In August, four months after the working group's proposal, the administration and the council sped up the enactment of new decrees on taxes and fees. But both parties denied the decrees had anything to do with the MRT project, and insisted they were only to add to the city's revenue.
From August to October the council passed six decrees on regional taxes.
Four decrees, passed in a record one month, were those on the 500 percent increase of annual foreigners tax; the new 10 percent tax on electricity produced by generators of above 60 KVA; an increased entertainment tax; and the control of alcohol distribution through higher distributor license fees.
Another was the decree on higher prices of city-issued labels, necessary for request forms to obtain services like block plans from the city planning agency.
The other decree increased fees of various city services.
In October, Hemly AR Syihab, chairman of the council's Commission C for city revenue, said there would be at least two more bills passed; one on new parking fees and the other on congestion pricing.
Regardless of the link taxes and fees have to the MRT project, it is high time the municipality explained exactly how it intends to finance the MRT project.
The basic design on the 17-station subway is already completed. But a presidential decree must be issued before the municipality can start gathering funds from the public.
If people are led to expect concrete action to overcome Jakarta's traffic blues, they must also be told the sacrifices expected of them.
Target
Some of the new decrees bring to mind the proposals of the MRT working group. Slamet Soelarno, administrative and finance manager of the group, earlier said the city needs to raise $25 million a year for the city's equity in the project, and another $35 million a year to pay back loans for 25 years.
He recommended raising funds by reactivating lapsed tax rules, increasing existing taxes and fees, and drawing new fees or taxes on city services.
The group recommended a tax on electricity generators, a fuel tax and a tax on parking lots.
So far only the tax on generators has been enacted into a provincial decree.
If the proposals are accepted, there will be increases in motorized vehicle taxes, traffic insurance, advertisement taxes, and higher fees for services such as acquiring land use permits.
The working group estimated the administration could collect at least Rp 300 billion per year from the suggested taxes and fees.
This could increase city regional revenue to Rp 3.36 trillion by 1998, Slamet said, a much larger target than the city's goal of Rp 1.87 trillion for the 1996/1997 fiscal year.
Currently city revenue comes from various fees and taxes such as vehicle tax, vehicle ownership transfer tax, entertainment tax, development tax, advertising tax, and city planning and development supervision fees.
The administration may be putting of announcing that society is to pay for the MRT project for fear of public outrage.
Many people have raised concerns of whether it is geologically possible for the city to have a subway.
Others have said reports of corruption and lack of maintenance will only lead to MRT disasters.
But while the administration waits for the presidential decree, it would do well to explain the ins and outs of how the project will affect people.
A sudden announcement of new taxes and fees may only serve to spark resentment on top of a lifetime of frustration in coping with traffic and public transportation. (yns/anr)