Progressive car tax is a double-edged sword

Progressive car tax is a double-edged sword

JAKARTA (JP): Governor Surjadi Soedirdja announced over the
weekend that the city administration has implemented the
progressive car taxation system as of April 1.

The governor told members of the City Council during a plenary
meeting that the tax system is an effort to increase Jakarta's
regional revenue from the tax sector.

"The city administration wants to increase revenues from
various sectors and the progressive car taxation is just the
beginning. We will intensify the collection of regional revenues
from other sectors in the future," Surjadi emphasized.

The governor said the Ministry of Home Affairs had already
approved progressive car taxation, which was first proposed by
the City Council.

Surjadi explained the new taxation system is also aimed at
helping solve the nagging traffic problems in Jakarta.

"The implementation of the progressive tax system is
synchronized with our effort to improve public transportation in
the city," Surjadi said.

The regulation, approved by the City Council last July, is
designed to increase municipal government revenue and to slow the
growth in the number of private cars by promoting the use of
public buses.

The regulation requires motorists to pay 120 percent of the
effective car tax rate for a second car. The tax rises to 140
percent for the third car, 160 percent for the fourth, 180
percent for the fifth and 200 percent for the sixth and
subsequent cars.

The municipal administration annually reviews the car tax
levels to reflect changes in the market price of cars.

According to the latest tax levels for cars, for example, 1993
or newer sedans with sale prices of less than Rp 50 million and
engines between 1,200 to 1,500 cubic centimeters (cc) are subject
to a tax of Rp 393,600 (US$177). Cars with 1,501 to 1,600 cc
engines are subject to a tax of Rp 458,400.

Sedans made after 1993 with sale prices over Rp 120 million
and engines between 2,101 cc and 2,400 cc are subject to a tax of
Rp 1.17 million.

The tax is levied on families (as stipulated in the resident
family card), on companies and on other legal entities.

A city councilor estimated that more than 186,000 car owners
would be subjected to the new progressive fees.

The Golkar faction at the House of Representatives urged the
city administration to educate its officials about the tax and to
cooperate with city police as well as with the West Java and
Lampung provincial administrations.

The faction said these steps are important to avoid confusing
Jakartans with the new tax regulation. (yns)