Govt and House agree on a new regional tax law
Govt and House agree on a new regional tax law
JAKARTA (JP): The government reached agreement with the House
of Representatives on Monday over a new version of the regional
tax law which will give regency and mayoralty administrations
greater powers in collecting taxes.
The House is expected to approve the bill amending Law
No.18/1997 on regional taxes and levies on Thursday at a plenary
session.
The revised tax law would come into effect on Jan. 1, 2001, in
line with the implementation of the laws on regional autonomy and
on intergovermental fiscal relations, which would grant
provincial, district and mayoralty administrations greater powers
in managing economic affairs.
The existing law is considered to be lacking flexibility for
the regions in collecting various taxes and levies and still
reflects an excessive domination by the central government over
the regions.
Speaking to reporters on the sidelines of the final debate
between the finance ministry and the House Special Committee,
director general of tax Machfud Sidik said that under the new
regional tax law, the provincial administrations would have the
authority to collect four types of taxes, including tax on
automotive vehicles, tax on fuel for vehicles, and tax on the use
of groundwater.
Under the existing law, the provincial administrations can
only collect three types of taxes.
The district and mayoralty administrations will be empowered
to collect seven types of taxes, including taxes on hotels,
restaurants, entertainment, advertising, construction materials
and industrial minerals and parking.
But, the new version of the tax law also stipulates that
district and mayoralty administration are empowered to create new
types of tax or levies as long as they are in line with the
criteria set in the tax law.
According to the existing law, the regional governments can
only collect a maximum of 30 types of levies.
Machfud said that according to the new tax law, the new types
of taxes or levies to be introduced by district or mayoralty
administrations cannot duplicate those which have been imposed by
the central or provincial government.
He also said that the tax subjects must be located in the
district or mayoralty concerned.
He added that the new type of tax must not be against the
interests of the general public.
"So, if the new type of tax would cause disruption or damage
to a certain business, it should be canceled," he added.
Machfud warned provincial and district administrations not to
be over zealous in collecting tax revenue once the regional
autonomy policy is implemented.
He said that an overaggressive tax policy would only impose
too many burdens on the people and discourage both local and
foreign investment.
He also urged the regional governments not to focus only on
collecting taxes but also improve the quality of their services
to the public. (rei)