Privatization of tax collection opposed

JAKARTA (JP): Several mayors and regents in North Sumatra have grumbled about the authority granted by the central government to the Humpuss Group to collect some of their local taxes.

The officials said they were perplexed by what they saw as a strange policy because local taxes are based on decrees of the local legislature and they should therefore be collected by the local administrations.

The subject of the controversy is a recent instruction from the ministry of home affairs to second-level administrations in North Sumatra to assign the collection of their Regional Development Taxes on hotels and restaurants to PT Humpuss.

PT Humpuss is controlled by President Soeharto's son Hutomo Mandala Putra.

Bahtiar Djafar, mayor of North Sumatra's capital, Medan, told journalists in the city on Thursday that he was apprehensive about the assignment of private companies to collect local taxes or service charges on behalf of local administrations.

Djafar recalled the bad experiences he had had previously when a private company, also from Jakarta, was authorized to collect charges related to the issuance of identity cards and advertisements. It failed to reach its revenue target.

"I am afraid that if the taxes are collected by a private company, our mayoralty may not be able to achieve its revenue target and that will adversely affect our operating and development spending," Djafar was quoted by Antara as saying.

Abu Hanafiah, the Mayor of Pemantang Siantar, Isodorus Sihotang, the regent of Dairi, and Djabanten Damanik, the regent of Simalungun, shared Djafar's concern about the possible negative impact of the policy.

Sihotang noted that local taxes should be collected by local administrations with the prior approval of the local legislatures.

"If those taxes must now be collected by a private company, the decree of the local legislature which becomes the legal basis for the tax collection should first be canceled," Sihotang said.

Damanik questioned the motive behind the authorization of the private company to collect local taxes. "Does the central government really have the heart to impose a ruling which favors a single private firm at the expense of local administrations?"

Djafar was doubtful that a private company would be more competent and do a better job with regard to tax collection.

He said the development tax is a major revenue source for most local administrations in North Sumatra, in addition to taxes and levies collected from streetlighting, building permits, parking, billboards and entertainments.

" I heard that the same private company would also take over the responsibility of collecting streetlight and parking fees. If that is really the case, then we will rely on the private sector for 50 percent of our local revenues.

Moreover, he contended, he wondered what would then be the task and responsibility of the local revenue office if the collection of local taxes and fees was undertaken by a local company.

Djafar said it would be better to simply close down and dissolve the local office if the central government pushed ahead with its policy of authorizing the local company to collect local taxes.

He questioned why the company had set its eyes only on the sources of revenues already well developed and managed.

He suggested that if the private company really wanted to help the local administrations increase its revenues, it should help develop the largely untapped tax sources, such as those on bicycles, dogs and radios. (rid)