From Jakarta GlobeBusinesses Not Amused By Tax Hikes on Entertainment
by Arientha Primanita
Proposed steep tax hikes on the cost of entertainment in Jakarta - including cinemas, high-end nightclubs and spas - have left many business operators in the capital warning of a potential economic disaster which will see establishments closing and thousands being thrown out of work.
Adrian Maelite, chairman of the Association of Indonesian Entertainment Businesspeople (Aspehindo), said the proposed tariffs, some as high as 75 percent of the retail price, would doom many businesses in the capital, and hurt the tourism sector.
“Many people depend for their livelihoods on these industries, so a tax that high is the same as murder. It is better for us to close our businesses,” Adrian said, adding that an estimated 300,000 people worked formally in the entertainment sector in Jakarta.
The Jakarta city administration has asked lawmakers at the Regional Legislative Council to raise taxes on a variety of entertainment venues, from nightclubs and cinemas to karaoke parlors and arcades. If the increases are approved, the tax on a cinema ticket would rise from 35 percent to 50 percent, while the entrance fee to a nightclub would be taxed at 75 percent, instead of the current 20 percent.
Adrian said current tax rates already left many entertainment businesses struggling to survive. If the proposed increases become a reality it will place a heavy burden on the entertainment industry, especially after the Ministry of Finance announced in March that it would raise the excise tax on alcoholic beverages by up to 300 percent, he said.
The Jakarta city administration is proposing to revise 10 regional taxes, including entertainment tax, vehicle tax, vehicle ownership transfer fees (BBNKB), parking fees and a tax on mining.
Edi Kuntadi, head of the Jakarta branch of the Indonesian Chamber of Commerce and Industry (Kadin), said he acknowledged the tax hike aimed to increase regional income, but said care needs to be taken so as not to overly burden affected industries. Their needed to be some compromise, he said.
Djonny Sjafruddin, head of the Indonesian Cinema Companies Union (GPBSI), said the union plans to resist the tax increase and had expressed its opposition to the Regional Legislative Council.
“Indonesian movie productions have just recently arisen again. More Indonesian movies are played compared to the foreign movies now,” he said, adding that the higher taxes would result in less people going to cinemas and deter investor interest in the sector.
Djonny said cinemas have been struggling to compete with pirated DVDs and movies screening on free-to-air TV.
However, consumers appeared ready to take the increases in their stride - at least until they start handing over the extra cash.
Hamka, a 43-year-old father of two, said he only went to the cinema once a month.
“I think there’s nothing wrong with raising the taxes. Going to the movies and other sorts of entertainment, people will still go anyway. It’s just a matter of pricing. When it’s too high for people to afford it, then it’s bad for businesses,” he said.
Erdika Indraputra, a 25-year-old interior designer, was against the tax hikes.
“If it’s going to be too expensive, where would we go for entertainment?” he said.
However, Erdika conceded that it was unlikely to stop him going to nightclubs. “Usually I go at least once a week, but maybe [after the tax hike] I could only afford to go there once every three months. The positive side is maybe after this I could actually save some money,” he said.