Illegal levies cripple tourism: Executives
Illegal levies cripple tourism: Executives
JAKARTA (JP): A web of illegal levies on hotels, restaurants
and travel agencies is harming tourism, executives say. These
levies even affect investment and planning permits.
Travel industry associations told a meeting on levies and
illegal payments in tourism yesterday that they were making a
complete list of illegal levies and official taxes which they
were forced to pay.
"Illegal levies and multiple taxation may account for up to 40
percent of the operational costs of a star-rated hotel," the
secretary-general of the Indonesian Hotel and Restaurant
Association (IHRA), Rianto Nurhadi, said.
The IHRA and Association of Indonesian Travel Agencies (Asita)
said they would submit the list to government in response to
President Soeharto's recent suggestion.
Earlier this month President Soeharto called for smoother
hotel investment licensing procedures and the elimination of
illegal levies affecting tourist businesses.
The government expects tourism to become the country's biggest
foreign exchange earner, outperforming the oil and gas sector, by
the end of the Seventh Five Year Development Plan in 2004.
Indonesia aims to receive 11 million visitors in 2005 who will
spend US$15 billion. This is almost double the government's
target of 6.5 million tourist arrivals in 1999, the final year of
the sixth development plan.
Minister of Tourism, Post and Telecommunications Joop Ave
acknowledged that hotels had always suffered illegal levies and
hefty taxes.
"For instance, hotels have to pay both the 10-percent value
added tax and the 10-percent development tax for telephone
charges.
"Hotels must also pay the 10-percent development tax, 25-
percent entertainment tax and 10-percent value added tax for an
outlet like a fitness center," Joop said.
He said hotels often paid incidental and illegal levies for
swimming pools, billboards, street lighting, etc..
Hotelier Wim Tambayong, a former director of state-owned PT
Hotel Indonesia International, said hotel investors were usually
subject to legal and illegal levies while their permits were
being processed.
Asita secretary-general Bermawi acknowledged that tour
operators regularly paid up to Rp 200,000 to the state airport
operator for holding tourist greeting dances.
Yasin Buchori, the Value Added Tax on Services chief at the
Tax Directorate General, yesterday conceded it was easy to exact
illegal and multiple taxes on businessmen.
"Originally Indonesia only recognized two kinds of levies --
tax and local fees," he said.
He said tourist businesses were subject to six kinds of taxes
and local fees.
"The first four taxes include income tax, value-added and
luxury sales tax, property tax and stamp duties which are
collected by the central government. The other two kinds of taxes
-- local taxes (such as development tax and entertainment tax)
and local fees -- are collected by local administrations," he
said.
But he said the Jakarta municipal administration collected 14
kinds of taxes and 13 kinds of fees.
"In fact there could be more than 2,000 kinds of local fees
imposed on the public," he said. (icn)