New bill pushes for local collection of gasoline taxes

JAKARTA (JP): The government has introduced a bill which would, for the first time, allow local administrations to collect gasoline taxes at a maximum rate of 5 percent.

The new tax is stipulated in a bill on local taxes and fees which was unveiled by Minister of Finance Mar'ie Muhammad yesterday at the House of Representatives.

Mar'ie presented the bill with three other bills on tax on the transfer of land and buildings, tax collection with distress warrants and tax courts.

"The four bills have an important and strategic role to provide a fair and clear legal foundation in tax collection," Mar'ie told the House's plenary session.

The bill on local taxes and fees sets the maximum rates for vehicle tax and gasoline tax at 5 percent, and 10 percent for the transfer of vehicle ownership.

"The gasoline tax will be a new income source for both regency and provincial administrations. This tax has great potential because fuel consumption keeps increasing every year," Mar'ie said.

Although the gasoline tax will be under the provincial administrations' jurisdictions, 80 percent of gasoline tax receipts will go to regencies, Mar'ie said.

The bill on local taxes and fees also sets maximum rates for six regency taxes: 10 percent for street lighting tax, hotel tax and restaurant tax; 20 percent for the extraction and processing of minerals tax and the exploitation of land water tax; 25 percent for billboard tax; and 35 percent for entertainment tax.

The bill also governs the kinds of fees which can be imposed by local administrations, including those on public, commercial and licensing services.

The imposition of fees by local administrations should be approved by the Minister of Home Affairs in consultation with the finance minister.

The bill on tax on the transfer of land and buildings stipulates that any transfer of land title and buildings worth more than Rp 20 million (US$8,460) is subject to a 5 percent tax.

"The imposition of this tax is expected to reduce land speculation," Mar'ie said.

The bill on tax collection with distress warrants empowers tax collectors to issue distress warrants, confiscation letters and debt-bondsman warrants.

A distress warrant can be issued if a taxpayer cannot meet his tax obligation on time. Confiscation letters can be produced 24 hours after the issuance of distress warrants. A debt-bondsman warrant can only be issued with the consent of the finance minister or the head of a local administration.

The tax office can also prevent a person with a tax debt of at least Rp 100 million (US$42,300) from leaving Indonesia for up to six months. This period can be extended twice.

The bill on tax courts governs the establishment of a tax court in Jakarta and, if necessary, tax courts elsewhere in Indonesia.

"The tax court will settle disputes in the field of tax which have recently been on the rise," Mar'ie said.

He said the court would handle disputes such as taxpayers' objections to decisions taken by tax officials and complaints about the levying of taxes.

The tax court will replace the current Tax Arbitration Council, which has been deemed ineffective in settling tax disputes, Muhammad said, adding that it would be based in Jakarta.

According to the bill, the head, deputy and other judges of the tax court would be appointed by the President for a five-year term extendible for another five years.

The draft law also stipulates that taxpayers must first pay the disputed taxes even though they intend going to the tax court.

The plaintiffs must also pay a court registration fee of Rp 1 million before their cases can be heard.

The registration fee is imposed to ensure that the cases to be presented are significant, and to facilitate the court's administrative process, Mar'ie said. (rid)