Progressive car tax to be applied nationwide

Progressive car tax to be applied nationwide

JAKARTA (JP): The government will apply the progressive car
taxation system nationwide in a bid to boost regional
administrations' revenues and curb consumerism, a senior official
said yesterday.

Director for Regional Revenues Development of the Home Affairs
Ministry Rusmana Ardiwinata said that the central government has
requested local administrations to prepare the technical
guidelines for the implementation.

The central government does not set the time frame for the
nationwide implementation of the home affairs ministerial decree
on the taxation system issued in 1993, Rusmana said.

"The implementation will depend very much on the capability of
each regional administration," he said. "The central government
always encourages local administrations to boost their revenues."

So far, seven provinces have applied the progressive taxation
system, namely East Java, East Kalimantan, Bali, Irian Jaya, West
Sumatra, North Sumatra, and Jakarta.

But only in Jakarta, where the number of motorized vehicles
grows by about 14 percent annually, has the enforcement of the
ministerial decree received high publication and responses from
the public.

In Jakarta, the technical guidelines were issued last week and
the regulation formally took effect on April 1, amid criticism
that the ruling has many loopholes.

The implementation of the progressive taxation system,
especially in Jakarta, has won the support of the Indonesian
Consumers Agency. But the agency urges the government to improve
the quality of public transportation.

The regulation sets the range of the additional tax rate
payment to between 20 and 60 percent. It, for example, requires
owners to pay 120 percent of the old car tax rate for a second
car and rises to 140 percent for the third and 160 percent for
the fourth and subsequent cars.

The regulation, approved by the Jakarta city council last
July, is designed to increase city revenue and to slow the growth
in the number of private cars by promoting the use of public
buses instead.

The government is hopeful that the policy will help ease the
notorious traffic congestions and air pollution in major cities
like Jakarta, Surabaya and Medan.

"The policy will also, hopefully, curb consumerism among
wealthy people who like spending their money on cars," Rusmana
told journalists.

The new regulation applies to privately-owned cars only and
not on those owned by companies.(29)