DPR reminds local governments to consider the economic ability of residents in determining tax assessments

JAKARTA - The provincial government needs to pay attention to the conditions of the local community in drafting the Regional Tax and Regional Retribution Regulation, especially regarding the pension component of Motor Vehicle Tax (PKB) and Motor Vehicle Name Return Tax (BBNKB). This was stated by Member of Commission II of the Indonesian House of Representatives, Muhammad Khozin.

"The sociological aspect of the community in the region, especially regarding the economic ability of the community, must be a reference when formulating the amount of tax opsen," said Khozin in Jakarta, Tuesday, February 17, as reported by ANTARA.

He reminded that the existence of PKB and BBNKB ops was a mandate contained in Articles 81-84 of Law Number 1 of 2022 concerning the Central and Regional Financial Relations and Article 3 paragraph (3) of Government Regulation Number 35 of 2023 concerning Regional Taxes and Regional Retributions with a magnitude of 66 percent.

"The meaning and purpose of this tax operation is the spirit of justice for the regions, especially the sub-district and city governments through this instrument," he said.

However, Khozin stated that the implementation of the PKB and BBNKB tax opsen must be carefully calculated. The formulation of the amount of tax opsen is not merely a perspective of local original revenue (PAD), but the ability of the community in the region must be a concern.

"It is not easy for the region, but a balance of policy is needed between strengthening PAD on the one hand and the aspect of community capacity on the other," said Khozin.

He proposed that local governments that have passed the Regional Tax and Regional Revenue Regulation can review the amount of tax revenue by considering the objective economic conditions of the local community.

"Including the option of providing incentives to the public sector that is affected as stated in Article 101 of Law Number 1 of 2022 concerning the Relationship between Central and Regional Finances," he said.

Khozin asked the Ministry of Home Affairs to map out provincial governments that have passed the Regional Tax and Regional Revenue Regulation and provincial governments that are discussing the Regional Tax and Regional Revenue Regulation as a preventive measure so that the tax policy can be mitigated early on.

"Early mitigation must be carried out by the Ministry of Home Affairs by taking concrete steps in the form of an executive preview of the regulations that are being discussed in the regions, especially regarding the PKB and BBNKB operations," said Khozin.

According to him, the central government has room to preview the raperda related to regional tax levies as stipulated in Article 99 of Law Number 1 of 2022 concerning the Central and Regional Financial Relations.

Previously, residents in Central Java called for not paying vehicle taxes following an increase in tax rates that were considered burdensome.

The appeal was a form of social protest by the community against the policies issued by the local government.