Jakarta Governor Fauzi Bowo said Friday that as long as the citizen registration system was still mired with inconsistencies, the progressive tax system for private vehicles was unlikely to be effective.

The parliament recently passed a new law on regional taxes authorizing the city administration to set vehicle tax rates on a progressive basis. Under the new system, car owners pay more tax for each additional private motor vehicle owned. The maximum tax rate for a single owner is 10 percent.

The policy aims to increase the regional tax income and stem the growth of car ownership, indirectly curbing traffic growth.

However, Fauzi said he would not rush the implementation of the new progressive tax regime on private vehicles as he was still questioning its effectiveness in Jakarta.

“I doubt it will [be effective] because the second car is likely to be registered elsewhere. How can we monitor this? Someone can hold a Jakarta ID card but can also hold an ID from another city,” he said.
If the single identity number (SIN) system was implemented in Jakarta next year, it could be the perfect opportunity to tidy up the registration number system for all taxpayers, including data on people’s assets, he added.

Under the SIN system, all citizens are assigned a unique number for all their personal documents such as their identity card, passport, driving license, insurance policy, land certificate, property ownership and tax card. Under the 2006 Law on Population Administration, the government is required to establish a single identity number (SIN) system across the country by 2011.

Head of Jakarta Tax Office Agency Reynalda Madjid said Friday the policy would take at least a year to be implemented.

“The law has only been passed recently. We still need to wait for the ministerial decrees and the regional bylaws,” he said.

Vehicle ownership transfer levies and vehicle taxes are the largest contributors to the city’s tax revenue. This year, the administration expects tax revenue to grow by 7 percent and gain Rp 9.39 trillion from taxes. The figure includes Rp 3.06 trillion from vehicle ownership transfer levies, and Rp 2.8 trillion, or 29.8 percent, from vehicle taxes.

Reynalda said the city was 7 percent behind its August target. “We should have reached 67 percent of our target by today [Friday], but we’re still at 60 percent,” he said.

He said tax revenue from vehicle ownership transfer levies (BBNKB) was below target, currently standing at 49 percent. “This is due to the decline in car purchases,” he said.

Car sales tumbled 39 percent in the January-June period this year — to 210,246 units — compared to the same period last year, where a total of 607,805 cars were sold, according to the Indonesian Automotive Industry Association (Gaikindo).

Transportation experts say the progressive vehicle taxation system will not solve Jakarta’s congestion problem, unless the administration pushes for further restrictions on roads and improves public transportation.

Indonesian Transportation Society (MTI)’s Bambang Susantono said an ERP (electronic road pricing system) should be applied to restrict traffic.

Darmaningtyas from the Institute of Transportation Studies (Instran) said that the new tax system would have a limited impact as a family with more than one car could register cars under different family member names.

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