Falling revenue lamented

JAKARTA (JP): A councilor urged the central government yesterday to stop collecting its 20 percent share of the city's hotels and restaurants tax revenue.

The head of Commission C for financial affairs, Amarullah Asbah, said that the city should be given more leeway to compensate its falling income due to the planned reduction of local taxes and fees.

In April the House of Representatives unanimously approved legislation which cuts the number of local taxes from 42 to nine and local fees or levies from 192 categories to 30.

"We will not be able to rely too much on the central government's assistance in the financing of city projects. So if the city loses a part of its income, it has to look for other sources to compensate it," Amarullah said.

"The tax collection from hotels and restaurants reached about Rp 235 billion (US$89 million) in the 1996/1997 fiscal year, which ended in March," he said.

In 1997/1998 this was expected to increase to Rp 265 billion, Amarullah said.

"Therefore, it would be beneficial for the city if the central government stopped taking its share of the city tax collection from hotels and restaurants," he said.

Under Presidential Decree No. 6/1993, the 10 most visited provinces, including Jakarta, Bali, Yogyakarta and North and West Sumatra, are allowed to impose a 10 percent tax on hotels and restaurants.

Twenty percent of the collected funds must be given to the Ministry of Tourism, Post and Telecommunications, which later gives them to the tourism promotion board.

"I think the funds for tourism promotion could be provided by the Ministry of Tourism, Post and Telecommunication from its own budget," Amarullah said.

"And the change will help the city become more independent and give it greater autonomy," he added.

The Jakarta administration currently relies on the central government for up to 40 percent of its total revenue.

"The new legislation on local taxes should not cause the city problems because it can further intensify the collection of taxes and levies from a number of services, including health, garbage and sanitation collection, identification card issuance and vehicles emission tests," he said.

The administration has thus far simplified tax collection procedures by giving greater power to mayoralties and district offices. The move, announced in June, was designed to improve tax collection, accuracy, and supervision and control of the tax offices. (07)