Governor seeks legal basis for fuel tax

Governor seeks legal basis for fuel tax

JAKARTA (JP): Although Governor Sutiyoso has backtracked on
his plan for an automotive fuel tax in the wake of a strong
public outcry, the administration is still counting on a clear
legal basis for introducing the measure.

The City Council is scheduled today to begin drafting a bylaw
regulating the taxes, expected to boost the administration's
sagging revenues due to the prolonged economic crisis.

The governor postponed his plan to impose the 5 percent tax on
automotive fuels Tuesday following the public condemnation. He
said he would review it when the economic condition improved.

Councilors reiterated yesterday they would reject the proposal
if the tax would be exclusive of the 71 percent increase in fuel
prices set by the central government.

They argued the latter increase had already added to the
burden of the public bearing the brunt of the economic crisis
which started last July.

Councilors and officials have complained that the central
government has yet to make it clear if the 71 percent fuel price
hike was inclusive of the 5 percent tax.

They said the draft bylaw would regulate how the
administration would administer the revenue from the tax if the
71 percent hike included the tax.

Chief of the United Development Party (PPP) faction, Achmad
Suaidy, and his counterpart at the Indonesian Democratic Party
(PDI), Lukman Mokoginta, made it clear the deliberation of the
bill would not mean the council would change its stance.

Suaidy said: "We stick to our decision that we will strongly
reject the tax idea if it is added to the 71 percent fuel price
hike because, if that's the case, it will only burden the people
who have been severely hit by the economic crisis."

The council is scheduled to decide on the bylaw on May 26.

"We hope that by that day, the central government will have
decided whether the 5 percent tax is included in the 71 percent
hike."

The administration has projected that revenue from the tax
will reach Rp 36.5 billion a year.

City councilors questioned last week the application of a 5
percent tax on fuel, earmarked for the city administration as
compensation for the sharp fall in locally generated revenues.

The introduction of the fuel tax was originally designed to
compensate for a downturn in revenues from the passage 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.

Suaidy said that the council decided to draft the bylaw
because other provincial governments had done the same.

"There are other local administrations which have started
deliberating the draft bylaw while waiting for the central
government's announcement on the tax policy."

Lukman Mokoginta also said the City Council should draft the
bylaw as other provinces had.

The government increased fuel prices early 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. (ind)