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)