City to comply to new law on taxes and levies

City to comply to new law on taxes and levies

JAKARTA (JP): Governor Surjadi Soedirdja said yesterday the
municipality would comply to the new law on regional taxes and
levies scheduled to begin on Jan. 1 next year.

Surjadi said it would be "impossible" for the city rules to be
against the law.

"We're going to adjust the city regulations with the new law
(on taxes and levies) if there is a difference," Surjadi said
after inspecting the ongoing park construction in front of the
City Hall building.

The House of Representatives passed five bills last month,
including the bill on local taxes and levies. The bills still
need to be ratified by President Soeharto,

Under the law, provincial administrations, including Jakarta,
have five years to phase out existing regulations on taxes and
levies.

Under the new law, provincial administrations will only be
allowed to collect three kinds of taxes: motor vehicle
registration, the transfer of motor vehicle ownership and
gasoline sales.

The law stipulates that district administrations can collect
six kinds of taxes. These are on hotels and restaurants, street
lighting, entertainment services, advertisements, quarried
minerals and groundwater.

One city law which may need to be changed is the new bill on
liquor sales.

Minister of Home Affairs Moch. Yogie S.M. issued a decree
banning regional administrations from imposing taxes, levies and
other retributions on liquor sales in March.

The decree, which was a follow-up of Presidential Decree
Number 3/1997 on supervision and control of alcoholic beverages,
stipulates that the administrations can only impose taxes on
liquor retailers.

This followed an uproar on the bill passed by Jakarta's City
Council which imposed higher fees on liquor distributors. Critics
said this was tantamount to legalizing alcohol, which was
offensive to Moslems.

Councilors and city officials said by imposing high fees on
distributors, the new decree would be more effective in
discouraging alcohol sales. It replaced a previous decree which
imposed fees on retailers, which councilors said was too weak in
curbing alcohol sales.

Councilor Helmy A.R. Syihab earlier said that only nine of the
14 city taxes would likely remain after the new law on taxes and
levies became effective.

He said five current regional taxes, including taxes on boats
and rafts, taxes on dogs and the slaughter of livestock, could be
stopped because their operational costs were too high compared to
their income.

Helmy, who chairs the City Council's Commission C on financial
affairs, said the council was still waiting for details of the
new law.

He said current fees, such as for building permits or parking,
would likely remain. These were needed to raise funds for city
projects, including streets.

The city's assistant secretary for economic and development
affairs, Prawoto S. Danoemihardjo, said that fees were attached
to city services and should remain.

It was illegal levies that led to a high cost economy and
should be eliminated, he said.

For the 1997/1998 fiscal year, the municipality hopes to
collect Rp 1.63 trillion (US$670.7 million) from taxes and Rp
290.72 billion from levies. (ste)