New laws on local taxes and levies
New laws on local taxes and levies
JAKARTA (JP): The government has to account for most nontax
revenue in the annual state budget and local administrations
have to abolish several taxes and levies under new laws the House
of Representatives passed yesterday.
The House unanimously approved bills on local taxes and
levies, fees on land and building rights, on tax collection with
distress warrants, on tax courts and on nontax state revenue.
The laws, which still need President Soeharto's ratification,
will come into effect on Jan. 1, 1998.
The minister of finance, Mar'ie Muhammad, said the passage of
the five bills was an historic moment for Indonesia's financial
legal system as they would provide the central government,
provincial and district administrations and taxpayers with legal
certainty.
"The five laws should enhance state and provincial revenue,"
Mar'ie told the House's plenary session.
The legislation on tax collection with distress warrants and
on the settlement of taxation disputes (tax court) should help
strengthen the implementation of tax laws, improve compliance and
protect taxpayers from tax officials' arbitrary decisions.
Mar'ie said the government was now preparing implementation
rulings, including government regulations, decrees and directives
to enforce the five new laws.
All four House factions -- the Armed Forces, the dominant
Golkar, the Moslem-dominated United Development Party (PPP) and
the Indonesian Democratic Party -- supported the new legislation.
But the PPP Party faction's spokesman, Chozin Chumaidy, said
laws themselves were not adequate and that it was urgent the
government reduce corruption and collusion between tax officials
and businesspeople.
"On one hand we continue to raise more revenue from taxes as
the primary source of state income. But on the other hand, state
funds continue to be embezzled in the disguised objective of
national development," Chozin said.
Chozin urged the government and local administrations to
abolish all regulations on the collection of levies or local
taxes which the new laws do not govern.
The government and local administrations have five years to
phase out existing regulations on taxes and levies which
contradict the new laws.
"The government should become more disciplined in managing
state funds," Mar'ie said.
The new laws require all government income from nontax sources
must be accounted for in the annual state budget.
Under the legislation on local taxes and levies, provincial
administrations can collect only three kinds of taxes. These are
on motor vehicle registration, the transfer of motor vehicle
ownership and gasoline sales.
90 percent of gasoline tax revenue, set at a maximum rate of 5
percent, should go to district administrations and the remaining
10 percent to provincial administrations.
District administrations can collect six kinds of taxes. These
are on hotels and restaurants, entertainment services,
advertisements, street lighting, quarried minerals and ground
water.
The law on fees on land and building rights stipulates that
any transfer of rights to land or buildings worth more than Rp 30
million (US$12,390) is subject to a 5 percent tax.
Eighty percent of revenue from this tax should go to district
administrations and the remaining 10 percent to provincial
administrations.
The law on tax collection with distress warrants empowers tax
collectors to issue distress warrants, confiscation letters and
debt-bondsman warrants to taxpayers who owe tax.
The legislation stipulates that distress warrants can be
issued if taxpayers do not pay their tax on time. Confiscation
letters can be produced 48 hours after distress warrants are
issued.
The tax office can bar a person, with a tax debt of at least
Rp 100 million, from leaving the country for up to six months.
The law on tax courts governs the establishment of a tax court
in Jakarta and, if necessary, tax courts elsewhere in Indonesia.
Mar'ie said the court would handle disputes like taxpayer
objections to tax officials' decisions and complaints about tax
assessment.
The tax court will replace the Tax Arbitration Council, which
proved ineffective in settling tax disputes. (rid)
Editorial -- Page 4