Govt criticized for revoking foreign exchange tax policy
Govt criticized for revoking foreign exchange tax policy
JAKARTA (JP): The government was strongly criticized yesterday
for revoking a decree on a planned 5 percent income tax for
foreign exchange purchases.
Legal expert Dimyati Hartono and corporate lawyer Todung Mulya
Lubis agreed the move did not encourage the much-needed legal
certainty needed in the country.
They also agreed Minister of Finance Fuad Bawazier should have
considered various legal aspects before issuing or revoking the
decree.
Dimyati, a law professor at the University of Indonesia, said
the decision could harm both national and international
confidence in the country's economic system and tarnish the
government's image abroad.
"Revoking the decree means that we (the nation) do not pay any
respect to the law at all," he said, as quoted by Antara.
"In fact, legal certainty is one of the barometers used by the
international community to observe our economic system and
policies," he added.
Todung criticized Fuad for "ignoring the procedures" when he
issued the decree Friday.
"The minister should have consulted the House of
Representatives before he could declare it a decree," Lubis said
Monday.
The planned income tax imposition was announced last Friday
and scheduled to go into effect Monday. It was intended to curb
further attacks on the rupiah.
Fuad Bawazier, however, announced Monday that he had revoked
the decree. He said the decision to cancel the 5 percent income
tax came after a series of negotiations between government
officials and the International Monetary Fund (IMF) review team
over the weekend.
Dimyati said legal certainty was one of the important elements
for foreigners to determine whether or not they would invest
here.
"Foreign investors would not like such a legal inconsistency,
particularly so during the monetary crisis," he said.
The law professor said inconsistencies in the legal sector
would discourage the international community's commitment to
helping Indonesia survive the economic woes.
"Such inconsistency shows that the government has no sense of
crisis and sense of urgency at all," he said.
"International and national confidence in our economic and
legal systems should have been thoroughly considered before
making any decision," he said.
Asked whether the Indonesian government was put under strong
pressure by the IMF to cancel the income tax plan, he said:
"Wasn't he (the finance minister) a member of the negotiating
team with the IMF?". (imn)