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)