Better security asked in return for new tax

Damar Harsanto, The Jakarta Post, Jakarta

Entertainment center owners are demanding better security in exchange for paying the new taxes to be imposed on them by the city administration.

Association of Indonesian Entertainment Center Owners (Aspehindo) chairman Adrian Maelite said on Sunday that the entertainment business would be willing to pay the new taxes as long as the Jakarta administration provided better protection and security.

The City Council endorsed a new bylaw on local taxes on April 21, which allows the city administration to charge taxes on 71 new targets, including entertainment businesses, hotels and golf courses.

"We would urging a quid pro quo from the administration in return for the higher taxes they are slapping on us," Adrian told The Jakarta Post on Sunday.

Under the new bylaw, anyone wanting to establish a new club has to pay a tax of Rp 5 million (US$550), while the tax on the establishment of a discotheque is Rp 5 million, a live music venue Rp 2 million and a karaoke center between Rp 3 million and Rp 5 million. On top of that, they still have to pay annual taxes of between Rp 1 million and Rp 3 million.

Adrian complained that the entertainment industry was often subjected to security disturbances.

He did not give details of the disturbances, but in the past five years the sector has been repeatedly targeted by groups such as the Islam Defenders Front (FPI), which has become famous for violently attacking entertainment centers that remain open during the Islamic fasting month of Ramadhan.

Last year, the FPI attacked and vandalized restaurants and entertainment centers across Greater Jakarta during Ramadhan.

This string of attacks was not the first. The group's leader, Habib Rizieq Shihab, was sentenced to a seven-month prison term in 2003 for ordering the members of his group to raid and attack bars, restaurants and pool halls over a protracted period of time. He was released in November 2003.

So far, little has been done by the police and the city administration to prevent such violence, despite the fact that the FPI often publicly expresses its intention of attacking restaurants and night spots that ignore their warnings.

Meanwhile, a spokeswoman for a five-star hotel here, who requested anonymity, complained that the new taxes would only place another burden on the already ailing industry.

"A new ruling always means more money," she said.

She said that most hoteliers were still trying to come to grips with the fuel price increases announced by the government early last month.

Worse still, competition among hoteliers had become tighter, forcing them to slash profit margins by offering unsustainable discounts, she complained.

"This simply shows that the business is no longer healthy," she asserted.

At the moment, an entrepreneur has to pay a tax of Rp 20 million to establish a hotel and Rp 15 million for a motel.

Entertainment centers, hotels and restaurants are among the targets of the newly endorsed bylaw on local taxes.

Amending Bylaw No. 3/1999 on local taxes, the new bylaw allows the administration to impose one-off start-up taxes and annual taxes on entertainment centers, hotels, restaurants and golf courses.

The administration has set a tax-collection target for 2005 of Rp 355.8 billion (US$37.4 million) from hotels, Rp 296.7 billion from restaurants and Rp 126 billion from entertainment centers.