Govt urged to revoke new ruling on hotel tax

JAKARTA (JP): A city councilor urged the central government yesterday to revoke a new government regulation which requires the city administration to set aside 20 percent of the tax it collects from hotels and restaurants for the promotion of tourism.

Head of Commission C for financial affairs Amarullah Asbah said that under Government Regulation No. 64/1988 dated July 13, the 20 percent of the tax should be transferred by restaurant and hotel owners themselves to the account of the Minister of Tourism, Arts and Culture, who is in charge of tourism promotion, development and improvement.

The new regulation was issued to change government regulation No. 19/1997 on regional taxation with the aim of advancing the financing of tourism promotion.

Amarullah said the new regulation, a copy of which was received by the council on Thursday, made things difficult for the city administration, which has been forced to revise its budget downward several times due to drops in locally generate revenue.

The 1998/1999 city budget has already been cut twice, namely from its original proposal of Rp 3.2 trillion to Rp 2.7 trillion and then to Rp 1.3 trillion.

"The decree doesn't match our aspirations, which are to increase the city's revenue during the current hardship. That's why we are asking the government to revoke the decree," he said.

The existing ordinance on hotel and restaurant taxation stipulates that all hotels and restaurants with an annual turnover of over Rp 30 million are subject to 10 percent tax.

In the 1997/1998 city budget, tax collection from hotels and restaurants reached about Rp 272 billion.

Amarullah suggested that instead of asking the city administration to allocate part of its tax collection to tourism promotion, the government should look for other sources of income without necessarily burdening the local government.

He also questioned why the owners of hotels and restaurants were required to transfer 20 percent of the tax they have to pay to the minister's account.

"It's no longer in style that a minister gathers funds directly from individuals," he said. (ind)