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)