Jakarta's 2003 budget to add burden to residents

Bambang Nurbianto, The Jakarta Post, Jakarta

Jakarta residents will have to shoulder more of a burden in 2003 as the 10.37 percent increase of the 2003 City Budget from Rp 9.7 trillion in 2002 to nearly Rp 11 trillion next year will strongly rely on taxes and other fees.

The draft of the 2003 City Budget expected to be discussed by the city administration and City Council this week shows that nearly all of the Rp 8.72 trillion of next year's city income will come from taxes and fees.

Therefore, targets of taxes to be collected by both the city administration and the central government will be increased in almost all sectors.

Targets of revenue from 10 tax components imposed by the city administration, for example, will increase from Rp 3.18 trillion in 2002 to Rp 3.87 trillion in 2003 or around a 21.6 percent increase.

The taxes will be collected from vehicle purchases, ownership transfer of vehicles, fuel use, hotels, restaurants, advertisements, entertainment, street illumination, ground water use and off-street parking.

Vehicle owners will be hardest hit next year by the taxes as expected vehicle tax revenues as a whole are set to increase by 35.04 percent from Rp 893 billion in 2002 to Rp 1.206 trillion next year.

In addition, transfers of vehicle ownership, which a total budget line of Rp 1.405 trillion in 2002 will go up to Rp 1.53 trillion next year, a hike of over 9.13 percent.

Other significant increases include the ones on fuel taxes (34.62 percent), entertainment tax (33.36 percent), street illumination (31.68 percent), hotel tax (22.59 percent), and underground water use tax (20 percent).

The city is also set to increase revenue from taxes managed by the central government including land and property taxes, property transfer of ownership and income taxes.

From these tax earnings, the city expects to reap around Rp 3.1 trillion, an increase of 12.01 percent from last year.

All the increases are expected to take place amid uncertain economic conditions here.

Despite the gloomy economic prospects from most analysts, the draft of the city budget assumes a very ambitious macro-economic growth target of 4.62 percent; while the rupiah rate against U.S. dollar is targeted at 9,200 as an average for the year and inflation rate is set at 9 percent.

The draft also has an increase 14.81 percent in revenue from 22 other line items, from Rp 283.2 billion in 2002 to Rp 325.1 billion in 2003.

On the other hand, revenue from companies and assets which are under the control of the city administration will still not contribute a significant share to the budget. The revenue is expected to be at around Rp 67.3 billion from the total budget of Rp 11 trillion.

Data from the City Revenue Agency shows that there are 28 city-owned firms with assets totalling tens of trillions rupiah.

In the 2002 City Budget, the contribution of the companies and assets was set at only Rp 64.9 billion. Those companies, however, failed to achieve a seemingly small target, as evidenced by the data from the end of November, their total contribution was only Rp 26.8 billion.

A number of city councillors blamed the failure on mismanagement and corruption by the companies' executives. They also expressed concern that the city administration still does not have transparent data about the city assets.