Proposal to Remove Progressive Vehicle Tax Gains Attention Amidst Calls for Reassessment

Jokowi reviews release of car exports to a number of countries, Jan-2023 (photo: ANTARA FOTO/Biro Pers Sekretariat Presiden)

In a recent development, there has been a suggestion put forward regarding the removal of the progressive vehicle tax, as it is believed to have minimal or no effect. This proposal aims to grant individuals the freedom to own multiple vehicles without being subjected to the progressive tax system.

The idea to abolish the progressive taxation of vehicles originates from the police force, specifically from the Head of the Indonesian National Police Traffic Corps (Kakorlantas Polri), Inspector General Firman Shantyabudi. According to him, the imposition of progressive tax fails to yield significant outcomes. Should this proposal be implemented, individuals with financial means would have the liberty to own any number of vehicles without any financial constraints.

During a meeting with the DPR Commission III, Firman shared an intriguing example to support his stance. He mentioned a conversation with Bu Nicke Pertamina, the President Director of Pertamina, where they were calculating subsidies. Surprisingly, they discovered a case where an individual who, based on records, was deemed eligible for subsidies, possessed a luxury Alphard car while residing in a modest dwelling. This revelation raised questions about the legitimacy of vehicle ownership and the potential misuse of subsidies.

Moreover, the proposal takes into account the prevalent practice of using others’ identities to circumvent the progressive taxation system. This strategy involves utilizing someone else’s personal information to purchase vehicles and evade financial obligations.

Firman believes that removing the progressive tax system would lead to better data management and improve the overall accuracy of vehicle ownership records. Additionally, this change would enhance law enforcement efforts, particularly through the use of the Electronic Traffic Law Enforcement (ETLE) system, which can be further optimized for effective implementation.

Another aspect that comes under consideration is the potential impact on fuel consumption. Discussions are underway to explore the feasibility of restricting the use of Pertalite fuel based on engine capacity (cc) and the owner’s National Identification Number (NIK). By implementing such measures, authorities aim to ensure precise fuel distribution and prevent potential misuse.

Firman also emphasized the need to address tax evasion and improve compliance. He highlighted that non-compliant vehicle owners or those with unclear registration details may face restrictions, such as the inability to dispense fuel or potentially encountering difficulties when parking their vehicles.

The proposal to eliminate the progressive vehicle tax has sparked significant debate and interest among policymakers, as it has the potential to reshape the taxation landscape and influence vehicle ownership patterns in the country.