Taxing extra cars
Taxing extra cars
Days after it was announced that the Jakarta city
administration was planning to introduce a progressive tax system
for cars, the news remains a topic of conversation among vehicle
owners in this capital city. The reason is of course obvious. For
many of Jakarta's families owning more than one car has since
long stopped being a luxury.
One argument that is often heard is that at present,
relatively few families remain in which the husband or father is
the sole breadwinner. The number of working women is considerable
and is likely to continue to increase in the future, not only to
make it possible for families to make ends meet, but because
many, or perhaps most, modern Indonesian women find their self-
fulfillment in working and putting their talents to productive
use.
With two (or more) members of the family working, and usually
in different places, the need for more than one car is
justifiable, or so the argument goes -- not to speak of the
children, who have to go to school.
On the other side of the issue, there can be no doubting the
good intentions of the authorities who devised the plan. In
general terms, greater fairness is indeed the objective of any
progressive tax system. City councilors have made it clear that
the progressive car tax plan is intended to diversify and
increase the city's revenues and to ensure a more equitable
distribution of wealth among the city's residents.
The bill, which was approved earlier this week, will bring
the new system into effect later this year. According to the new
legislation, motorists will have to pay 120 percent of effective
tax levels for a second car, 140 percent for a third, 160 percent
for a fourth, 180 percent for a fifth and finally 200 percent for
any number of cars exceeding five.
A City Council spokesman, Zakiruddin Djamin, said that with
the progressive tax system, the city's revenues were likely to
increase by just under three percent a year to reach the
equivalent of US$2.42 million a year.
Thus it seems that both the proponents and the critics of the
plan have valid arguments for and against the new system,
respectively. Obviously, in its execution, the new progressive
tax system is likely to meet with snags and problems, especially
in the initial stages. Such details of execution can probably be
worked out gradually during the execution.
What may be of greater relevance, it seems to us, is to look
at some of the reasons why so many Jakartans find it expedient to
own more than one car. Cars are among the most expensive items
for families to own in Indonesia.
As has often enough been pointed out, the sad state of the
public transportation system in Jakarta is blamed for much of the
ills that beset this city's traffic. And a major cause, of
course, is the seemingly uncontrolled proliferation of privately-
owned vehicles as compared to public transit vehicles. Owning
more than one car obviously aggravates the problem. But if
discouraging ownership of more than one car is an objective, a
progressive taxation system alone may not solve the problem.
Perhaps it may help to reserve part of the revenue derived
from the new system to finance the improvement of this city's
public transit system. If necessary, the city administration
could also think of lowering the taxes imposed on bus companies
so that more money can be made available for improvements. In any
case, we believe that it will be worthwhile to look at the core
of the problem and try to find an overall solution that benefits
both the administration and Jakarta's citizens.