Govt hailed for dumping exit tax

The Jakarta Post, Jakarta

More plaudits were expressed on Thursday regarding the government's plan to abolish the departure tax imposed on people wishing to travel overseas, as this would facilitate businesses in expanding their businesses overseas.

Minister of Industry and Trade Rini Soewandi said the plan would encourage more businesspeople to travel abroad to promote trade.

"So far, the departure tax has discouraged businesspeople from promoting trade abroad," she told reporters during a press luncheon on Thursday.

Currently, said Rini, only businesspeople traveling on an official trade mission with government officials were exempt from the tax.

Aside from such officials, other categories that are exempt from the tax are diplomats and members of sporting and cultural missions.

Chris Kanter, the deputy chairman for investment, transportation, information, telecommunications and tourism at the Indonesian Chamber of Commerce (Kadin), concurred.

"The scrapping of the tax may not be really significant for big businesses, but it will make a major difference for those in small and medium enterprises," he told The Jakarta Post.

Chris added that the departure tax issue was a regular source of complaint from businesspeople in the tourism sector, especially those who wished to attend bilateral and regional meetings.

"The government's plan would certainly help those in the tourism industry to develop their businesses. Not to mention that airline tickets to foreign countries are now quite cheap ... even cheaper than the tax," he said.

The secretary at the Directorate General of Taxation, Djazoeli Sadhani, said that his office was currently examining both the positive and negative aspects of the government's plan.

"The revenue we get from departure tax is really huge, and goes toward helping to develop this country," he told the Post.

Djazoeli said that the gross revenue from the departure tax stood at almost Rp 1.2 trillion in 2003.

First imposed in 1982, the tax, which is treated as an advance payment of income tax, is now pegged at Rp 1 million for air travelers, Rp 500,000 for those traveling overseas by sea, and Rp 200,000 for those traveling overseas by land.

The tax can actually be claimed back, but few people actually do so. According to Djazoeli, only a small amount of the Rp 1.2 trillion collected last year was reclaimed by taxpayers.