Tax reform slashes provinces' revenues<\/p>\n
JAKARTA (JP): The tax reform introduced earlier this year, by
\nraising the tax-free threshold on property, will reduce regional
\nadministrations' revenues from property taxes by a total of Rp
\n100 billion (US$43.8 million), according to the director general
\nof taxes.<\/p>\n
\"The new law on property tax has taken some 10 million to 12
\nmillion former taxpayers off the list,\" Director General of Taxes
\nFuad Bawazier said after opening an international training
\nprogram on property tax yesterday.<\/p>\n
The training program was attended by 13 participants from nine
\ndeveloping countries, including Pakistan, Laos, Papua New Guinea,
\nTanzania and the Western Samoa Islands.<\/p>\n
Fuad said the tax reform has not only updated the previous
\n1985 tax laws, but has also helped cut back high tax-collection
\ncosts, which mostly came from administrative procedures.<\/p>\n
The government announced in January an increase in untaxable
\nproperty from Rp 2 million to Rp 8 million in value.<\/p>\n
Tax collection costs, especially in rural areas, often
\namounted to more than the value of the tax collected, he said.<\/p>\n
\"There are property taxes (in villages) which are as meager as
\nRp 100, Rp 200 or Rp 500. This is not worth the cost of
\ncollecting it,\" Fuad said.<\/p>\n
The new law on property tax exempts such people -- between 10
\nand 12 million in number -- from property tax, he said.<\/p>\n
Fuad said the \"losses\" caused by the reduction in local
\nadministrations's property tax revenues will be made up for by
\nthe central government.<\/p>\n
\"This way, everyone will benefit from the situation because
\npeople won't have to pay taxes and the local administrations
\nwon't lose revenue,\" he said.<\/p>\n
There are five sources of property tax in Indonesia: urban,
\nrural, mining, forestry and plantations. Sixty percent of the
\ngovernment's tax receipts are derived from urban and rural
\nsources, while the remaining 40 percent come from the other
\nsources.<\/p>\n
Fuad said that property tax collection in Indonesia has been
\ngrowing at a rate of between 25 percent and 26 percent per annum.<\/p>\n
He said that developing countries should now try to rely more
\non domestic earnings derived from taxes in financing their
\ndevelopment programs, rather than on foreign loans and natural
\nresources.<\/p>\n
\"It has become more expensive to rely on foreign borrowing and
\ntoo risky to rely on natural resources,\" he said. (pwn)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/tax-reform-slashes-provinces-revenues-1447893297",
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