Govt vows gradual cut in export tax on logs

Govt vows gradual cut in export tax on logs

JAKARTA (JP): The government will gradually cut taxes on logs
to reach 10 percent in two years to guarantee a sufficient supply
for domestic demand, the forestry and plantations minister said
Thursday.

Sumahadi said the decision would not contravene the
government's reform commitment made to the International Monetary
Fund (IMF) in January.

"It is the best way to avoid timber companies from
overexploiting our forests for export without providing a supply
for domestic industries," he said.

The 50-point agreement with the IMF stipulates that "in March
1998, export taxes on logs, sawn timber, rattan and mineral will
be reduced to a maximum of 10 percent ad valorem, and appropriate
resource rent taxes are imposed".

Sumahadi said the government currently imposed 30 percent
export tax on logs.

By the end of December this year, he said, the tax would be
reduced again to 20 percent. By the end of December 1999, the
export tax would be cut further to 15 percent.

The government would further reduce the tax to 10 percent by
the end of 2000, he said.

Sumahadi also said that the export taxes would eventually be
replaced by resource rent taxes, as required by the IMF, to
protect the environment while eliminating the bias against
production for export rather than for domestic use.

He added that he was still waiting for a directive from
President Soeharto on regulating resource rent taxes.

The government previously imposed an export tax of 200 percent
on logs. The high tax was aimed at encouraging timber companies
to fulfill local demand and force buyers to purchase Indonesian
processed, higher-value wood products. (gis)