Govt wants to annul 'nuisance taxes'
Govt wants to annul 'nuisance taxes'
The Jakarta Post, Jakarta
The Ministry of Finance will propose to the Ministry of Home
Affairs to annul a host of provincial regulations and city bylaws
that hamper businesses in regions.
"We (the finance ministry) are studying a lot of provincial
regulations that are not necessary and just hinder business
activities. We will propose to the Ministry of Home Affairs to
annul them," Tjep Ismail, director of provincial revenue at the
directorate general of fiscal balance at the Ministry of Finance,
said on Tuesday.
He said that his office had so far identified a total of 206
provincial regulations and city bylaws that must be scrapped.
In 2001, the Ministry of Finance proposed to the Ministry of
Home Affairs to annul 80 regulations, in 2002 there were 92 more,
and as of June of this year 34 regulations, he explained. It is
not clear, however, why the Ministry of Home Affairs had not
annulled these regulations.
Since the regional autonomy law became effective in 2001, many
local administrations began issuing a variety of sometimes very
bizarre regulations mainly aimed at expanding their revenue
sources. But many of the rulings, however, have become a
financial and bureaucratic headache for investors.
A World Bank report last month particularly addressed the
matter saying the issuance of a host of "nuisance taxes" by
regional governments had negatively affected the business and
investment climate in the regions.
Examples of such taxes are those for importing goats into
Bogor, West Java from other provinces or for Coca-Cola bottles in
Lampung province.
Some regulations also are seen as overtly discriminative
toward prospective investors from other provinces or countries.
The World Bank said that one of the ways to help resolve the
problem was to give more power to regions over land and building
taxes as compensation for eliminating the nuisance taxes.
"All around the world, land and building taxes are done at the
local level. We feel that having regions decide on the rate for
this tax would be a key to better governance," the Bank said in
its latest assessment report on the country's fiscal
decentralization program.
Reportedly, the Ministry of Industry and Trade is also
drafting a bill on trade that will revise some provincial
regulations that increase the cost of distributing goods to other
regions.
Such regulations had been cited by economists as the main
reason for soaring prices of goods in the country, which in turn
makes them less competitive against imported products.