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.