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Jakarta Post

Higher progressive vehicle tax takes effect in June

  • Dewanti A. Wardhani

    The Jakarta Post

Jakarta   /   Fri, June 5, 2015   /  07:48 am

The Jakarta administration has, as of this month, implemented the recently issued Bylaw No. 2/2015 on vehicle tax, which aims to limit the growth of private vehicle ownership in the city.

The bylaw, issued early last month, is a revision of Bylaw No. 8/2010. Besides stipulating a slight increase in progressive tax on private vehicles, the new bylaw also lifts the maximum progressive tax to 10 percent from the previous 4 percent.

'€œThe bylaw takes effect this month. We will conduct trials and familiarize vehicle owners with the new regulation for the first two weeks of the month,'€ Jakarta Tax Agency head Agus Bambang Setyowidodo told The Jakarta Post over the phone on Monday.

Paid annually, a progressive tax increases as the taxable amount increases. According to the bylaw, an owner'€™s first vehicle is charged 2 percent of the vehicle'€™s sale value, and each new vehicle is charged an additional 0.5 percent. For example, a second vehicle is charged 2.5 percent and a third vehicle 3 percent.

Meanwhile, the 17th and any further vehicles are taxed 10 percent of their value. However, the new bylaw also allows a cut of 0.5 percent in progressive tax for the fourth and fifth vehicles.

Under the old bylaw, the administration charged 1.5 percent for the first vehicle, 2 percent for the second, 2.5 percent for the third and 4 percent for the fourth and the following vehicles.

The agency, Agus said, aimed to increase vehicle tax income with the new bylaw.

This year, the city is targeting to secure Rp 6.6 trillion (US$495,000) in vehicle tax after booking Rp 4.97 in vehicle tax revenue last year.

Governor Basuki '€œAhok'€ Tjahaja Purnama, meanwhile, said that the city administration aimed to limit vehicle ownership in the city.

According to data from the Jakarta Police, as of 2014, there were 17.4 million motor vehicles in Jakarta, 13 million of which were motorcycles and 4.3 million four-wheeled vehicles. The number saw a 12 percent increase from the previous year.

'€œThere are too many vehicles in Jakarta because cars and motorcycles are affordable, and the tax is not a burden. The more residents use private vehicles, the more congested the city'€™s traffic becomes,'€ Ahok told reporters at City Hall on Thursday.

He added that he expected the tax increase to make potential buyers think twice before buying a new vehicle.

Separately, Communications and Informations Agency head Ii Karunia said that the city administration would work with city-owned lender Bank DKI to encourage non-cash payment of vehicle taxes.

'€œNon-cash payments are not mandatory, but they are much encouraged in order to prevent bribes and gratuities,'€ Ii said at City Hall on Thursday.

He went on to say that vehicle owners still had to complete documents at the police'€™s one-stop administration office, but could make payments by transfer through ATMs. Currently, however, non-cash payments can only be made through Bank DKI.

The agency, Ii said, would continue to improve the non-cash payment system.

'€œIn the future, we aim to cooperate with other banks as well to increase access for vehicle owners because we want all tax payments to be made not using cash,'€ he explained.

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