New tax system for vehicles approved

New tax system for vehicles approved

JAKARTA (JP): The City Council and the governor yesterday
approved the new car tax bill which included the imposition of an
annual progressive car tax system.

The bill, to be put into effect this year, however, has yet be
processed before it becomes a municipal regulation after approval
by the Ministry of Home Affairs.

The bill, sponsored by all four factions in the council's
Commission C on finance, states that motorists must pay 120
percent of effective tax levels for a second car, 140 percent for
a third car, 160 percent for the fourth car, 180 percent for the
fifth and 200 percent for the sixth and any others.

The extra taxes will be imposed on owners of passenger cars
which are not used for public transportation.

Spokesman for Commission C, Zakiruddin Djamin, told the
council's meeting here yesterday that with the imposition of the
progressive car tax system, the city's revenues will likely
increase by 2.88 percent to around Rp 5.24 billion (US$2.42
million). It is estimated that around 126,896 motor vehicles,
from reportedly 1.8 million motor vehicles possessed by the city,
will be subjected to this bill.

The progressive car taxes are aimed to diversify the city's
source of revenue and designed to achieve a more equal
distribution of wealth by drawing more taxes from the rich to
help solve the city's traffic problems.

The new bill is expected to be more objective and fair by also
considering the car type, its function, its cylinder or horse
power, its year of production and its price. The bill is also
based on a car's potential in damaging the road surface.
Therefore a special chapter for taxes imposed on trucks and
trailers is also included in this bill. (arf/als)