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)