Councilors want plan to cut tax put on hold
JAKARTA (JP): City councilors urged the municipality yesterday to ask the central government to postpone the planned enactment of Law No. 18/1997 which would reduce the number of regional taxes and levies.
Councilor Lukman Mokoginta of the Indonesian Democratic Party (PDI) faction said the law should be shelved for 12 months as the taxes and levies -- the city administration's major sources of its locally generated revenue -- were needed during the economic crisis.
"As we all know, the city administration doesn't have an instrument like 'Aladdin's lamp' which could change the situation instantly," Lukman told a plenary session where factions voiced their views on the draft city budget.
Under the law, scheduled to be enacted on May 23, the number of regional taxes will be cut from 42 categories to nine and the number of levies from 192 categories to 30.
City revenue is generated from 13 taxes and 44 levies.
Of the locally generated revenue, which amounted to Rp 2.8 trillion in the 1996/1997 fiscal year, Rp 1.7 trillion alone came from taxes and levies.
The United Development Party (PPP) faction advanced a similar view.
"It makes sense if a dispensation is given to the administration... as the city is the center of (the country's) activities and 60 to 70 percent of money circulation is in Jakarta."
On Wednesday, Governor Sutiyoso read out the city's draft budget for the 1998/1999 fiscal year and indicated there would be a 10.42 percent drop -- from the current budget of Rp 3.2 trillion -- to Rp 2.79 trillion.
Locally generated revenue in the 1998/1999 budget is projected to decline 15.86 percent to Rp 1.72 trillion, from an estimated Rp 2.03 trillion, due to the economic turmoil and the enactment of Law No. 18/1997.
Foreigners tax
The law could certainly reduce the city's ability to collect various taxes and levies, including parking fees and foreigners tax.
The Golkar faction urged the administration to approach the central government and suggest it continue imposing the foreigners tax, which would be eliminated under the law.
Tjokro Soeprijanto, who read out the faction's statement, said the law's enactment signaled it was time for the administration to rearrange and reorganize potential sources of revenue.
The administration, for example, should crack down on hotel and restaurant taxes -- which are not included in the law -- to motivate all businesspeople to abide by existing regulations and pay taxes.
"The faction also hopes that the central government will drop the city administration's obligation to hand over 20 percent of hotel and restaurant taxes," he said.
"We will fully support the administration if such a call is made to the central government."
The Golkar faction also paid special attention to the government policy on banking, which requires banks, including the city-owned Bank DKI, to hold a minimum capital of Rp 1 trillion by the end of this year for the first year of operation and Rp 3 trillion over the following two years.
"The Golkar faction hopes that Bank DKI can still manage to grow amid tight competition in the banking industry," Tjokro said.
Deputy Governor for Development affairs TB.M. Rais told reporters after the session that due to the decrease in the 1998/1999 draft budget, the city will concentrate only on infrastructure projects.
"Our priority is to continue projects related to public interests, such as roads, bridges and flyovers.
"We have already downsized development projects by delaying some building ventures, including the South Jakarta mayoralty office. We can't continue the projects because we don't have enough money."
This year, for instance, the municipality will only build one flyover in Raden Inten in Pondok Kopi, East Jakarta, he said.
"I really hope the situation will get better," he added. (ind/edt)