Arientha Primanita – As the city administration prepares to impose a progressive tax on vehicle ownership in a bid to boost revenue, it also hopes to highlight its benefits in solving Jakarta's traffic problems.
Under the new rule, owners will be taxed 1.5 percent of the vehicle's value for their first vehicle, 1.75 percent for the second, 2.5 percent for the third and 4 percent for the fourth and above. The tax, which takes effect on Jan. 3, applies to new and existing vehicles.
Previously, the tax was a flat 1.5 percent of the vehicle's value, regardless of how many other vehicles the owner possessed.
Iwan Setiawandi, head of the city's tax office, said on Monday there were an estimated 490,000 vehicles in the city that could be classified as second vehicles, along with 111,000 third vehicles and 109,000 fourth vehicles.
With the progressive tax in place, he said, the city administration could earn up to 7 percent more in vehicle tax than before.
"Of the revenue from vehicle tax, around 10 percent will be earmarked for infrastructure development and improving public transportation, as stipulated in a 2009 law on regional revenue," he said.
Iwan a dded that of the vehicle tax revenue from the previous fiscal year, which reached Rp 3.06 trillion ($340 million), Rp 300 billion had been allocated for infrastructure and transportation, including road repair projects.
He said the tax office would work with the city's population and civil registrar to identify car owners. "We'll trace the ownership based on address to prevent people from fraudulently claiming to own fewer vehicles," he said.
Jakarta Governor Fauzi Bowo previously said the progressive tax was necessary to stem the number of new vehicles hitting the city's streets each day. The number of new cars and motorcycles in Jakarta increases by an estimated 10 percent a year, according to the administration, with 890 new motorcycles and 420 new cars registered each day.
Fauzi said the higher tax would prompt people to start using public transportation rather than private vehicles.
Ellen Tangkudung, a transportation expert from the University of Indonesia, welcomed the higher tax but said the revenue should be spent transparently.
"Imposing a progressive tax is necessary in Jakarta," she said. "The revenue generated must really be spent on improving public transportation because everyone expects comfortable public transportation."
Ellen added that the city administration should issue more policies that stimulate public transportation instead of private vehicle ownership.
She also suggested transportation authorities in Jakarta work more intensively with their counterparts in the satellite communities of Tangerang, Bekasi and Bogor to restrict the number of vehicles entering the capital each day.
Muhammad Sanusi, a member of the City Council's Commission D, which oversees development issues, said the city must ensure that revenue generated from the progressive tax is spent on improving existing public transportation networks.
"The money from the vehicle tax must go toward public transport facilities like the TransJakarta busway, commuter railways and road improvement projects," he said.
Sanusi said the city administration should not focus just on raking in the extra revenue but instead ensure the money will be used to produce concrete results for the public.