Govt policy to scrap VAT on books 'trifling'
Govt policy to scrap VAT on books 'trifling'
Tertiani ZB Simanjuntak, The Jakarta Post, Jakarta
The government's decision to scrap the 10-percent value-added
tax (VAT) for books on religion, education and holy books, both
imported and locally-printed, is a welcome development but
insufficient to stimulate reading habits among Indonesians.
The Indonesian Publishers' Association (IKAPI) chairman
Arselan Harahap said on Monday that the exemption of the VAT on
the distribution of imported and domestically-published books on
religion, education and holy books reduced the prices by 4
percent at the most.
"The amount is insignificant if we want to educate the public
at large through good readings," Arselan said at a press
conference here on Monday.
Arselan called on the government to get rid of the hefty taxes
beleaguering the country's publishing industry so that it could
produce more affordable books.
Currently, publishers must pay a royalty, plus VAT, to
authors, translators, illustrators and book designers. In the
printing process, the publishers must still pay taxes for papers
and ink, all of which are charged to consumers.
Such taxes and levies have resulted in expensive book prices,
pushing the country's publication industry into in a vicious
cycle, whereby the public doesn't buy books because they are too
expensive, while publishers must survive on thin margins due to a
low demand.
Data from the World Bank and UNESCO Statistical Year Book
revealed that the number of literate Indonesians is approximately
84 percent of total population of 214 million, and that Indonesia
spends less than US$1 per person on books a year.
The country's publication industry turns out between 3,000 and
4,000 book titles per year, or 3,000 copies per title.
The number is clearly inadequate to meet the needs of 214
million Indonesians.
Harahap expressed the hope that the government would give
royalty facilities similar to neighboring Malaysia, where no VAT
is applied to the royalty paid to authors valued less than 5,000
ringgit.
The government issued in December 2000 regulation No. 146/2000
on the exemption of VAT on particular items, including military
equipment, ammunition and books.
Books on the following topics are exempted from the
regulation, however: entertainment books, novels, magic,
advertising, promotion of a business, non-education catalogs,
caricatures, horoscope, horror, comics, and painting
reproductions.
However, the regulation states that other topics may be
exempted from VAT after obtaining approval from either the
Minister of National Education, or Minister of Religious Affairs
or designated officials.
The regulation went into effect on March 1, 2002.
IKAPI welcomed the ruling on Monday, but expressed doubts that
the move would invigorate the country's battered publishing
industry.
The application of the regulation on books industry is
executed under the Ministry of Finance Decree No. 353 issued on
June 2001, and the Directorate General on Taxation circular
issued on February 2002.
Director for Industrial Value-added Taxes of the Directorate
General on Taxation Irawan explained that the regulation
automatically wiped out the mechanism in which publishers usually
spend extra in seeking approval for tax exemptions.
"We believe that the tax exemption will reduce the spending
cost and will later reduce the price of books. We identify a
potential loss to the state, but we expect a trade off where more
consumers will buy books which later will increase the publishers
tax income," Irawan told reporters.
Meanwhile, IKAPI declared Monday, May 17 as the country's
National Book Day. The date was chosen because it was in
conjunction with the first announcement of the National Book
Month which falls on every May.
It is also the birthday of IKAPI.
"There will be discounts on bookstores on that day ... people
are expected to buy at least one book -- or give it to their
loved ones as a gift," Harahap said.