Taxes are the main method a government uses to collect revenue. These days the number of cars has reached astonishing heights. Whenever I look out the window of my father’s office, all I see is a stationary ocean of cars with their bright lights on, unable to move. Imposing taxes on cars are likely to have advantages and disadvantages.
Increasing taxes on cars is going to discourage people from buying more cars. Those who have two or three cars may even consider reducing and selling some of their cars.
Thus, increasing taxes is going to decrease traffic and pollution, as fewer cars on the road means less smoke emitted and less noise from deafening horns. The environment will be more tranquil and the air more clean.
The government will be able to get more revenue by imposing taxes, which they can use to improve literacy and healthcare in Jakarta. This would also narrow the gap between the rich and poor further.
However, cars improve transportation and for Jakarta’s economy to progress technological advancement is essential. It’s only when people buy cars that car sellers and manufacturers will earn and get an incentive for further research and development. For Indonesia’s economy to develop I think taxes need to be imposed carefully as it can create a barrier in the process of development.
Another aspect to consider is the fact that cars are regarded as a luxury here in Indonesia and not everyone can afford them. The demand for cars is elastic and as a result, car manufacturers will suffer losses in profits. People are also likely to buy more motorcycles as a substitute.
This again will cause traffic congestion problems and increase the chances of accidents. Through experience and observation I think people drive motor bikes recklessly. Hence, limits also have to be imposed on the production of motorcycles.
Another substitute is the TransJakarta busway, which is always full at rush hour. If taxes on cars are to be raised, the number of buses needs to be raised, too, as more people will want to use buses to go to the office or school within Jakarta.
Indonesia imports gasoline from other countries. Imposing taxes on cars would reduce the demand for gasoline consequently decreasing imports and giving a more favorable balance of payments.
On the other hand, a different approach can be taken to solve this problem of too many cars. It would be nice if Jakarta had a MRT system where people can travel through fast trains all around the city.
This would I think reduce the number of cars on the road as people would like to use this mode of transport.
Imposing taxes for car owners has benefits as well as drawbacks. It needs thoughtful consideration and careful implementation, keeping in mind consequences.
Abha Dalmia
Jakarta
