Jakarta – Regional governments, state-owned insurance company Jasa Raharja, and the National Police have missed at least $6.67 billion in vehicle taxes and fees revenue due to non-compliance, denying them a key funding source to provide transportation services and protection to road users around Indonesia.

Apart from the motorized vehicle tax (PKB), the owner must pay the Road Transport Accident Fund Compulsory Contribution (SWDKLLJ) and administration fees.

The local governments collect the vehicle tax, which usually goes to fund their annual budget for building roads and public transportation. Meanwhile, the compulsory contribution goes to paying the premium for road accident insurance, which is managed by Jasa Raharja. The administration fee is paid to the police once in five years when the vehicle needs to re-register and renew its license.Non-compliance from owners in paying these taxes and fees undermines these institutions' abilities to provide services, executive and expert said.

Rivan A. Purwantono, Jasa Raharja's president director, said in a statement Sunday that around 40 million registered cars or motorcycles owners did not pay the taxes and fees on their vehicles regularly.

"Many motorized vehicle owners remain oblivious of important benefits of paying Road Transport Accident Fund Compulsory Contribution (SWDKLLJ)," Rivan said.

According to the National Police data, there are 148 million vehicles as of December 2021. But, the Ministry of Home Affairs, compiling data from the regional governments only ended up with 112 million cars. Meanwhile, Jasa Raharja only recorded 103 million vehicles.

The non-compliance of 40 million vehicle owners caused regional governments, Jasa Raharja, and the National Police to miss around Rp 100 trillion ($6.67 billion) in taxes and fees revenue, according to Jasa Raharja estimation.

Agus Pambagio, the managing partner at PH&H Public Policy Interest Group, said the compulsory contribution was critical for the Jasa Raharja operation, as another funding source, namely fees paid by public transport passengers, is small.

"SWDKLLJ is the most important component because it involves accident insurance for vehicle owners and public transport passengers when they become traffic victims," Agus said.

"Unfortunately, the premium amount for public transport passengers is small because it is only Rp 60 per passenger," Agus said.

He identified four provinces in Java as having the most significant potential for vehicle taxes and fees revenue. The biggest tax potential is in West Java at Rp 18 trillion, East Java at Rp 16 trillion, Central Java at Rp 13 trillion, and DKI Jakarta at Rp 9 trillion.

"The potential for such a large tax is significant for the adequacy of budget needs in the region and can be used for the construction of safe public transportation facilities, as well as improving transportation infrastructure," said Agus.

The National Police have developed some initiatives to improve compliance in paying the vehicle taxes and fees. For one, it would start deleting data of vehicles that missed their tax payment for a certain period from its registry.

That would render the vehicles illegal to be operated on Indonesian roads and put the owners at risk of facing a sentence of two months in prison or paying Rp 500,000 in fines.

Another initiative was electronic traffic law enforcement. The police use CCTV cameras to capture the image of the vehicles, used as the basis for issuing traffic tickets. But, the system is still marred by low accuracy.

From 36 million violations the electronic system has captured, only 417,000 tickets were issued. Less than half of the tickets, or 153,000 to be exact, were paid, the police data showed.

Source: https://jakartaglobe.id/business/40m-vehicles-operate-on-indonesian-roads-with-667b-tax-bills-unpai