Councilors query 5% fuel tax application

JAKARTA (JP): City councilors questioned yesterday the application of a 5 percent tax on fuel, earmarked for the city administration as compensation for the sharp fall in locally generated revenues.

Central to the councilors' queries, voiced in a meeting with officials of the City Revenue Office, was whether the tax was already included in increases of fuel prices of up to 71 percent announced by the government early this week.

"If the answer is no, the City Council will strongly reject the tax idea as it will further burden the people who have been severely hit by skyrocketing prices in the current crisis," said head of the Golkar faction, Fatommy Asaari.

Lukman Mokoginta, head of the Indonesian Democratic Party faction, said that the people were already burdened by the monetary turmoil, which has no clear resolution in sight, and there should not be further troubles added to their load.

Representatives of the Armed Forces and the United Development Party factions concurred.

The introduction of the fuel tax was originally designed to compensate for a downturn in revenues from the enactment of Law No. 18/1997 on the collection of local taxes and levies starting May 23.

Based on the law, the number of local taxes will be cut from 42 categories to only nine, and the number of levies from 192 categories to 30.

Jakarta administration revenues are currently derived from 13 different taxes and 44 different levies.

Fatommy said that the Golkar faction would only go ahead with the deliberation of a bylaw on the fuel tax if the tax was part of the fuel tax increases.

"The social cost will be higher if people should pay more for the tax. You can see now their negative reaction toward the fuel price increases.

"Can you imagine what their next reaction would be if they were asked to pay the tax?"

The Armed Forces faction chairman, Sumekar K.W., said that the faction chose to postpone the deliberation until "everything is all right".

Head of the City Revenue Agency Wahab Rachmatsjah refused to comment on the council's action.

The government increased fuel prices this week by between 25 percent and 71.43 percent, and electricity tariffs by 20 percent to reduce subsidies and curb the state budget deficit.

The price of kerosene, the fuel most widely used by low-income families, experienced the smallest increase of 25 percent to Rp 350 per liter. The price of gasoline increased by more than 71 percent to Rp 1,200. (ind)