Council ratifies bill on annual foreigners tax

JAKARTA (JP): A new bill authorizing the city to increase foreigners' annual tax by an average of 500 percent was passed yesterday.

When the bill becomes effective, it is expected to bring in at least Rp 17.62 billion (US$74.50 million) as revenue from taxes on about 45,800 expatriates living here, the ABRI faction, chaired by Nawadji, said yesterday in the council meeting.

The bill will become law after the approval from the home affairs ministry is obtained.

Governor Surjadi Soedirdja, represented by Deputy Governor for Economic and Development Affairs Tb. M. Rais, assured that the tax increase will be accompanied by a commitment to improve services to foreigners who stay or live in Greater Jakarta "because the image of the city is at stake."

Council Speaker M.H. Ritonga said that with more and more expatriates expected, it is "natural" to increase their taxes from the rates ruled by a 1989 regulation.

The average increase of 500 percent takes into account the higher salaries received by expatriates and the need to adjust the value of the rupiah, Ritonga said.

Those subject to the tax are foreigners staying here for more than 90 days. Those not subject includes foreigners involved in social and religious work.

In its address, the Golkar faction said it supported the bill as it gives a "sense of justice" to local employees who may have abilities similar to expatriates.

However the faction, represented by Soegijo, urged local employees to improve their work ethos and skills to face increasing competition in the upcoming free trade era.

The increase is also expected to prevent the employment of low-paid immigrants for work that can be done by locals, the commission A in charge of governmental affairs noted.

Tax charged to the head of a family is increased from Rp 90,000 to Rp 450,000, while that on the spouse is increased from Rp 60,000 to Rp 300,000.

The first and second child are subject to increased taxes from Rp 30,000 to Rp 150,000. The third child and other family members are subject to Rp 300,000 each in annual tax.

Electricity

Also passed yesterday was a bill imposing taxes on electricity consumers using generators with over 60 KVA (kilo-volt-amperes) in installed capacity. The taxes from the generator-users, who must now have permits, are expected to bring in an annual revenue of about Rp 9 billion from a recorded 1,300 consumers among hoteliers, restaurant and factory owners and office managements.

The bigger the installed capacity and higher the power (KWH) used, the higher will be the tax.

The tax, Ritonga said, is aimed at consumers who have benefited from street lights using generators, as so far, only domestic consumers have been paying the three percent tax in bills.

Responding to councillors' suggestions that the revenue be used to install street lights in slums, Deputy Governor Rais welcomed the idea.

"But we should note that out of Rp 56 billion spent each year on installing more lights and maintenance, Rp 15 billion goes for payment of electricity bills," he said.

Installing lights in slums also involves coordination with the state-owned electricity company in constructing the power house, he added.

Golkar also suggested that the city-owned Bank DKI could collect the taxes on generator-users. Rais said it is not possible for private parties to collect the taxes as only the administration is authorized to do so. (anr)