Despite the city's slated plans to raise sales taxes on the nightlife industry, it is planning to ease taxes on business-related transportation, book fairs and family oriented entertainment.
"We want to encourage business in Jakarta and increase regional income at the same time," tax office head Reynalda Madjid told The Jakarta Post on Thursday.
He said the administration did not want to burden existing tax payers and instead sought to expand income sources based on the 2009 regional taxation and retribution law.
It will decrease taxes on public vehicles from 1 to 0.75 percent, while heavy vehicles will receive a tax cut to 0.2 percent.
Taxes imposed on street lighting in industrial areas will also be lower at 3 percent.
Reynalda said lower tax rates for the business entities is expected to encourage investment in the city.
He also said Jakartan families could expect lower prices for entertainment as the sales tax on family's and children's recreation spots would be lowered to 10 percent.
Book fairs are also expected to sell cheaper books as taxes are to be lowered from 10 to 5 percent.
Reynalda said the city would also rely on new tax sources such as cinema tickets, which would be taxed up to 25 percent, while it would also impose 10 percent tax on catering businesses and business renting space inside hotel buildings.
"The caterers and the businesses in hotels were previously only charged with value added tax paid to the state treasury. Now, both entities are to pay regional tax," Reynalda said.
Previously members of City Coucil and the Legislative Council said that they were discussing revision on local tax bylaw to adjust the 2009 regional tax and contribution law.
They have agreed to increase the sales taxes on karaoke lounges, night clubs and bars from 20 to 35 percent while disagreeing on some other areas, including taxation on vehicle ownership, fuel and parking fees.
The councillors wanted higher tax rates for those three items, while the administration refused, keeping them at their current rates.
All parties involved in the discussion, however, were expected to reach an agreement on May 27.
Head of the legislative body Triwisaksana said it is expecting more income from vehicle tax.
"The administration should also include a progressive tax for vehicle ownership," he said.
The first vehicle would be a subjected to 1.5 percent tax, the second vehicle, 2 percent, the third vehicle 4 percent and owners of four or more vehicles would be subject to 5 percent tax.
"The reason we are enacting a progressive tax on the ownership of multiple vehicles is because we think owning three or four vehicles is no longer for the family's needs but more for social prestige," Triwisaksana said.
Last year, the city recorded a total income of Rp 9.85 trillion (US$1.1 billion) from local taxes.
The biggest single tax revenue came from vehicle ownership, which reached Rp 6.1 trillion.
The smallest tax contribution was groundwater, which recorded Rp 182 billion, while sales tax on entertainment reached Rp 320 billion.
According to Reynalda the administration expected a 12 percent increase of tax revenue this year.
