Councilors divided over lottery tax

Ahmad Junaidi, The Jakarta Post, Jakarta

The factions in the City Council remain divided over a proposed bylaw that would require companies that organize lucky draws to pay taxes on the contests.

The largest faction in the council, the Indonesian Democratic Party of Struggle (PDI Perjuangan), has said it supports the bylaw because it would fatten the city's coffers.

"The bylaw would increase the city's tax revenue," the faction's spokesman, Bimo Hastoro, said during a plenary session of the council.

A number of other factions, including the National Mandate Party and the Golkar Party, have also come out in support of the bylaw for similar reasons.

If approved, the bylaw would oblige the organizers of lucky draws to pay the city administration taxes of 20 percent of the value of the prizes given away.

There is already a law that requires winners of lucky draws to pay a tax of 25 percent of the total value of their prizes to the central government, through the Ministry of Social Affairs.

However, the Islamic-based United Development Party (PPP) and the Crescent and Star Party (PBB) criticized the proposed city bylaw, saying it could be used to legalize gambling.

Governor Sutiyoso said some 231 organizers requested permits to hold lucky draws last year, with total prizes valued at some Rp 50 billion (US$5.5 million).

In the first quarter of this year, 97 organizers asked for permits to hold lucky draws giving away prizes valued at a total of Rp 34 billion.

Approximately 70 percent of the 2002 city budget of Rp 9.3 trillion is derived from tax revenue. Vehicle taxes accounted for almost 90 percent of total tax revenue, with the remaining 10 percent coming from hotel and restaurant taxes.