Thursday, August 20, 2009

Indonesia will tax multiple vehicles

Indonesia's parliament approved a tax bill that will allow local governments to increase tariffs on car and motorcycle owners who have more than one vehicle from next year.

The bill is aimed at increasing sources of revenue for local governments and decreasing traffic problems, Home Affairs Minister Mardiyanto told reporters after the bill was passed.

It will become law after being signed by President Susilo Bambang Yudhoyono, or after three months.

The combined number of cars, buses, trucks and motorcycles in Indonesia increased 71 percent to 72 million vehicles last year from 2004, according to Transport Ministry data. Road construction grew 7 percent by length during the same period.

New car sales may increase at least 11 percent next year as economic growth in Asia's third-most populated nation accelerates, Bambang Trisulo, chairman of Indonesia's automotive association, said last month.

The new law will allow local governments to annually tax owners for their second and successive vehicles a levy of 2 percent to 10 percent of a sum from the multiplication between the vehicles sale value and a coefficient that relates to the regions road conditions.

Mardiyanto said crowded regions can impose higher taxes than sparsely populated ones as long as they are within that band.

Regions are also allowed to make car and motorcycle owners annually pay as much as 2 percent of a similarly calculated sum for their first vehicles, according to a copy of the legislation distributed at the parliament building.

Local governments should allocate at least 10 percent of this new tax source for transport infrastructure projects in their respective regions, said legislator Harry Azhar Azis, who led the team that wrote the new law.

Veiw full news from the original source:
Detnews/Bloomberg, 20 August 2009