More tax for car owners

Starting next year, those planning to buy more than one car will not only have to build a bigger garage, but pay more taxes too.

The Jakarta Tax Agency has said that under a new progressive vehicle tax code, which will come into effect on Jan. 1, Jakarta residents who own more than one car will pay a new annual tax for every additional vehicle they own on top of annual vehicle tax for each vehicle.

“We will charge vehicle owners based on the vehicle registration data. If an owner is found to have more than one vehicle registered in his name, the progressive taxes will be imposed on him automatically,” head of the regulatory division at the city’s tax agency Arif Susilo told The Jakarta Post late last week.

Under the new multiple vehicle tax system, the city government will apply vehicle tax progressively, from 1 to 4 percent of the vehicle’s value for each additional private car.

To boost revenue from vehicle tax, the city government plans to eventually extend the progressive vehicle tax to include motorcycles.

“We have yet to extend the system for motorcycle owners,” Arif said.

Under the progressive car ownership tax, the administration will impose a 1.5 percent tax for the first additional car, 2 percent for the second, 2.5 percent for the third and 4 percent for each additional car after that.

The tax will apply to any additional car owned, regardless of the make and type.

With the new tax regulation, the city government hopes to discourage Jakartans from owning more than one vehicle.

There are more than 5 million vehicles registered in the city. However, the city administration has set a low expected revenue target for the new tax.

The Tax Agency expects the multiple vehicle ownership tax will apply to between 10 and 20 percent of the total number of vehicle owners in the city.

In addition to imposing a higher tax on private vehicles, the city will self-impose a 1.5 percent vehicle tax for every city- and state-owned vehicle.

The administration says that the vehicle tax hike is an effort to address traffic congestion. Experts have dismissed the new tax as unlikely to have a noticeable effect on congestion, and have said the tax scheme is simply a way for the administration to increase its revenue.

There are more than 11.3 million motor vehicles in the city, outnumbering the registered populations of Jakarta, which was put at 9.6 million by the latest census.

Jakarta is facing the grim prediction that there will be about 12 million privately owned vehicles clogging the capital’s roads by 2011, and total gridlock by 2014 if the rate of vehicle ownership continues at the current rate of 1,500 new motorcycles and more than 500 new cars introduced to the streets every day.

The city administration expects tax revenue to be Rp 9.8 trillion (US$1.09 billion) this year, up from Rp 8.5 trillion (US$940 million) in 2008.