City revising revenue bills to satisfy new regulation

JAKARTA (JP): The municipality is in the process of revising its revenue bills to bring them into line with the government's new regulations and laws on local taxes and fees, a member of the City Council said yesterday.

Amarullah Asbah, chairman of the council's Commission C on financial affairs, said the revision was being worked out at the request of the City Council.

"The revision is badly needed to enable the municipality to collect taxes and fees from the public based on the new regulations," Amarullah said.

He said the revised bills would then be submitted to the council for further deliberation, so it would be some time before they become effective.

Last month the government announced a deregulatory package, which cut local taxes from 42 categories to nine, and the number of fees from 192 categories to 30.

The new package was announced after the bills on local taxes and levies were passed by the House of Representatives in April. They are scheduled to be enacted on Jan. 1.

The city revenues have thus far come from 13 different taxes and 44 different levies. In the 1996/1997 fiscal year, the taxes and levies brought in Rp 1.7 trillion (US$653.8 million) of the city's revenues of Rp 2.8 trillion.

According to the new bills on local taxes and levies, all provincial administrations will only be allowed to collect three kinds of taxes: motor vehicle registrations, the transfer of motor vehicle ownership and gasoline sales.

Amarullah expressed optimism that the municipality and the city's five mayoralties would still be able to collect the targeted revenues despite the new policy.

For the 1997/1998 fiscal year, Governor Surjadi Soedirdja is aiming to collect Rp 3.22 trillion in revenues.

Along with the introduction of the new deregulation package last month, the government also revealed the planned introduction of a new 5 percent tax on fuel, which is still awaiting approval from the Ministry of Home Affairs after consultation with the Ministry of Finance.

The introduction of the fuel tax is expected to compensate for losses suffered from the reduction of other taxes.

Apart from the fuel tax, the government's new regulation on local taxes includes an annual 1.5 percent tax on motorized vehicles; a 10 percent tax on the first transfer of vehicle ownership; a 10 percent tax on hotel and restaurant bills; a 35 percent entertainment tax; a 25 percent tax on billboards; a maximum 20 percent tax on illuminated street signs.

City revenues have increased by an average 26.85 percent a year over the last five years from Rp 753.9 billion in 1992/1993 to Rp 1.78 trillion in 1996/1997. (ste)