Income tax should
\nbe adjusted to
\npromote fairness<\/p>\n
JAKARTA (JP): Kwik Kian Gie, a noted economic analyst, wants
\nthe government to adjust rates of both income and property taxes
\nto promote fairness.<\/p>\n
Speaking at a seminar on the possible reform of the tax law,
\nKwik said the present income and property taxes are not
\nequitable.<\/p>\n
\"The people of the low income group are still unfairly
\ntreated,\" he told more than 100 executives at the seminar held by
\nthe IBII Business School.<\/p>\n
Speakers at the seminar, which was officially opened by
\nFinance Minister Mar'ie Muhammad, consisted of a number of noted
\neconomists, including Irzan Tanjung of the University of
\nIndonesia, Hussein Kartasasmita, a former senior tax official,
\nand Soemarso, the chairman of the Center for Fiscal and Monetary
\nStudies (CFMS)<\/p>\n
Kwik, also the vice chairman of the Indonesian Democratic
\nParty (PDI), said the present tax system is not just as the
\npeople with an annual income of Rp 2 million (US$931) and those
\nwith Rp 10 million are charged the same rate.<\/p>\n
The present income tax is progressively set at 15 percent for
\nan annual income of up to Rp 10 million (US$4,760), 25 percent
\nfor an income bracket of Rp 10 million to Rp 50 million and 35
\npercent for incomes of over Rp 50 million. The rates are enforced
\nfor both individuals and corporations.<\/p>\n
Modification<\/p>\n
According to Kwik, the income brackets for individual
\ntaxpayers should be modified into nine categories and their rates
\nshould be more diversified -- from 10 percent for the lowest
\nincome bracket to 60 percent for the people of the highest income
\ngroup.<\/p>\n
Kwik said the lowest income bracket should be set at between
\nRp 12 million and Rp 46 million with the top bracket at above Rp
\n10 billion (US$4.75 million).<\/p>\n
\"The proposed income bracket of above Rp 10 billion looks
\nstrange,\" he said. \"But believe it or not, the very rich people
\nin the country have an annual turnover of above Rp 10 billion,\"
\nhe added.<\/p>\n
Kwik said that the income tax reform should be introduced only
\nfor individuals, and that the present tax system should be
\nenforced only for corporate taxpayers.<\/p>\n
He said it is not necessary to adjust the income tax rates for
\ncorporations because the adjustment could discourage business
\nactivities.<\/p>\n
Kwik also suggested land and building (property) taxes be
\nadjusted to be fairer and more objective by introducing
\nprogressive rates depending on the financial conditions of the
\ntax payers.<\/p>\n
The property tax is set at a single rate of 0.1 percent of the
\nprice base or the market value of the building and land.<\/p>\n
He also suggested that a successive or heritage tax be imposed
\non income or property taxpayers inherit.<\/p>\n
\"The government should also raise the untaxable income from Rp
\n1.72 million per annum at present to Rp 12 million,\" he said.<\/p>\n
Soemarso, the chairman of the Center for Fiscal and Monetary
\nStudies (CFMS), said the government should consider the change in
\nrates in its efforts to promote the fairness of taxation.<\/p>\n
He said that cuts in tax rates should not jeopardize the
\ngovernment's efforts to increase state revenues from the tax
\nsector.<\/p>\n
\"There should be a trade-off. The tax incentive should be
\nbalanced with efforts to further diversify tax bases and the tax
\ncollection ratio,\" he added.(hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/income-tax-should-1447899208",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}