Nine taxes may be left after new tax law is effective

JAKARTA (JP): Nine of the 14 city taxes are likely to remain after the new bill on taxes and levies becomes effective on Jan. 1 next year, a councilor said.

The head of the City Council's Commission C on financial affairs, Helmy A.R. Syihab, said some of the taxes no longer brought in income.

"The taxes that could be abolished are those that have high operational costs but raise less income than expected," Helmy of the United Development Party said yesterday.

He said the five local taxes that could be abolished were taxes imposed on water transport vehicles, the transfer of water transport vehicle ownership, non-motorized water vehicles like boats and rafts, the transfer of non-motorized water vehicle ownership, and the slaughter of livestock.

"The five taxes can be abolished soon as the new law comes into effect. But now we're waiting for further details on the new law on local taxes and levies," Helmy said.

However Helmy said all fees were likely to remain. City secretary for economic and development affairs Prawoto S. Danoemihardjo said earlier that fees were attached to city services and should remain. It was illegal levies that led to a high cost economy and should be eliminated, he said.

The new law says most non-tax revenue must be accounted for.

Helmy said current levies collected by the city, such as for building permits or parking, were still important to fund city projects.

For instance, he said, the city needed a lot for infrastructure, such as streets, to accommodate the rapid increase of vehicles.

"Without the income from taxes and levies, it would be very difficult for the city to raise funds," Helmy said.

For the 1997/1998 fiscal year, the municipality hopes to collect Rp 1.63 trillion (US$708.6 million) from taxes and Rp 290.72 billion from levies.

On Thursday, the House of Representatives passed five bills, including the bill on local taxes and levies, into laws.

Municipalities have five years to phase out existing regulations on taxes and levies which contradict the new laws.

Provincial administrations will only be allowed to collect three kinds of taxes: motor vehicle registration, the transfer of motor vehicle ownership and gasoline sales.

District administrations can collect six kinds of taxes. These are on hotels and restaurants, entertainment services, street lighting, advertisements, quarried minerals and ground water.

Helmy said another potential source of revenue based on the new bill was the transfer of rights to land and buildings.

The bill, which still needs to be ratified by President Soeharto, states that the transfer of rights to land or buildings worth more than Rp 30 million is subject to a 5 percent tax. (ste)