Councilors want plan to cut tax put on hold
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)