However, the city needs to collect new data on land and buildings throughout the capital to create a cadaster for fiscal purposes. Such a register would form the database for “comprehensive” taxation policies to be applied in the future, including the urban and rural land and building tax (PBB-P2). The fiscal cadaster was expected to be finished in July.

“There is a lot of incomplete information about our taxpayers,” Anies said at City Hall on Tuesday.

The city administration has issued Gubernatorial Regulation No. 38/2019 on PBB-P2 exemptions for individuals or institutions whose land and building assets amounted to less than Rp 1 billion (US$70,175) in taxable value of property (NJOP).

Article 2A stipulates PBB-P2 tax exemptions on land and building ownership and on transfers of land ownership.

As stipulated in Article 4A, that tax policy only applies until Dec. 31 this year.

The policy was issued in 2015 under the leadership of Basuki Tjahaja Purnama as Jakarta governor at the time.

Despite the expiration date, Anies emphasized that the administration had no intention to end the policy.

On the contrary, he said the administration was currently drafting a policy to expand the scope of PBB-P2 tax exemptions, which initially applied to tax objects worth less than Rp 1 billion, to meritorious taxpayers, including veterans, retired police and military personnel, retired civil servants, national heroes, honorary medal recipients, and former presidents and vice presidents, with certain requirements.

However, he refused to elaborate further, as the draft regulation was expected to be completed within days.

The new policy was likely to reduce the city’s tax revenue, Anies admitted, but he said the administration could potentially earn more once the fiscal cadaster was completed.

The Jakarta Taxation Agency reported Rp 8.89 trillion in PBB-P2 tax income last year, exceeding the target of Rp 8.5 trillion. This year, the city aims to collect Rp 9.5 trillion in PBB-P2 tax.

One of the attempts to increase tax revenue is the recently issued Gubernatorial Regulation No. 41/2019 on PBB-P2. Article 3 of that regulation stipulates that taxpayers who own unused land in premium areas like Jl. MH Thamrin, Jl. Sudirman, Jl. Rasuna Said, Jl. Gatot Subroto and Jl. MT Haryono are required to pay a double tax rate.

However, Article 3 section 4 stipulates that those who transform the unused land into open green space are required to pay only half the general tax rate.

“Hence, Jakarta will have more open green spaces, some provided by the city administration and others by private parties through the tax discount,” Anies said. The capital has long struggled to meet the target of transforming at least 30 percent of land in the city into open green space, as required by the Spatial Planning Law. The latest data show that only 14.9 percent of Jakarta is open green space.

Moreover, Anies claimed the administration was preparing a special regulation for houses in upscale areas.

City councilor Santoso from the Democratic Party, who heads Commission C overseeing finance, applauded the policy on open green spaces, as the city was struggling to increase the percentage.

However, he hoped the PBB-P2 tax exemption for meritorious people should be strictly defined, because some of them could be categorized as “fortunate people”.

“[The city administration] needs to consider the [economic] standing,” he said.

A similar opinion was expressed by Rusli Abdullah, researcher at the Institute for Development of Economics and Finance (INDEF), who said the open green space policy was the most suitable so far, both for the administration and land owners.

“Unused land burdens owners, because it’s a gamble whether the land will be occupied if they transform it into office space, for instance. Open green spaces, instead, could indirectly increase people’s productivity by providing parks, hence fresher air,” he said.

With regard to the expanded PBB-P2 tax exemption, he said it could be deemed discriminating, as many residents were unable to earn a proper living. He urged the administration to maximize efforts against tax evasion.

Center for Indonesia Taxation Analysis (CITA) executive director Yustinus Prastowo said the administration’s taxation policies had to protect lower-middle income earners, while tax collection from commercial entities should be “optimized”.

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