Jakarta eyes higher revenue from entertainment sector

Damar Harsanto, The Jakarta Post, Jakarta

The Jakarta administration plans a more aggressive campaign to collect taxes from the capital's numerous entertainment centers, restaurants and hotels.

Deputy Governor Fauzi Bowo said the administration would not hesitate to take punitive action against owners who refused to pay their full taxes.

"If necessary, we will issue confiscation orders to force owners to pay their tax obligations," Fauzi said during a hearing with councillors on Tuesday.

The assistant to the city secretary for financial affairs, Hari Sandjojo, said the administration wanted to increase tax revenue from entertainment centers, hotels and restaurants in order to reduce its dependence on revenue from vehicle taxes.

"We believe vehicle tax revenue will soon peak because the city's streets are already overcrowded, so we need to increase our revenue from other sectors," Hari told The Jakarta Post.

He voiced the suspicion that many entertainment centers in the capital were underreporting their profits to avoid having to pay taxes.

"Look at how much they charge for a bottle of mineral water sold at a karaoke hall. It does not make any sense that they (the management) do not pay taxes," he asserted.

Association of Indonesian Entertainment Center Owners chairman Adrian Maelite said forcing entertainment centers to pay more taxes would deal a severe blow to the already ailing industry.

"This policy will kill us. Lots of owners are still struggling to overcome the impact of the massive antidrug campaign launched by police in nightclubs and entertainment centers," Adrian told the Post.

Entertainment center owners say the drug raids scared away customers and forced owners to temporarily suspend 120,000 workers, or 30 percent of the 400,000 people employed by the industry in the city.

Some owners also claim they have had fewer visitors since fuel prices went up and forced people to cut unnecessary expenditures like nights out.

Adrian also said media coverage of terrorist threats and the bird flu outbreak was keeping tourists and locals away from entertainment centers.

Executives of the Indonesian Hotel and Restaurant Association were not available for comment on Tuesday.