Mar'ie says no more delays needed in property tax law

JAKARTA (JP): Minister of Finance Mar'ie Muhammad expressed confidence yesterday that Indonesia's battered economy would start recovering after the convening of the People's Consultative Assembly (MPR) in March.

Therefore, Mar'ie said, the 6-month delay in the implementation of a building and land purchase tax law was enough to relieve some of the people's burden.

"We must be optimistic that after the general session, there will be certainty and the recovery process will start," Mar'ie said at a session with House of Representatives Commission VIII for state budget and finance.

The MPR will convene in March to elect the country's president and vice president.

Mar'ie made the statement in response to a demand by the Moslem-oriented United Development Party (PPP) faction and the minority Indonesian Democratic Party (PDI) faction that the government extend the delay in the enforcement of the land and building purchase tax law from six months to at least one year.

The government, through a presidential decree dated Dec. 31, 1997, postponed the implementation of the tax law from its original date of Jan. 1, 1998 to June 30, 1998.

The decree said the worsening economy had greatly burdened the people, and therefore it was necessary to postpone the implementation of the tax law, which could add to the people's burden.

Hamzah Shodiq of the PPP faction and Nico Daryanto of the PDI faction said at Monday's working session that the current economic turmoil could last longer than the government expected.

And therefore, they said, the government should postpone the enforcement of the tax law until at least next year.

However, Mar'ie argued the six-month delay was enough since the government would also abolish other levies imposed on land and building purchases once the new tax law was in place.

Law No. 21/1997 on the land and building purchase tax, if implemented, would require anyone purchasing land worth more than Rp 30 million (US$3,000) to pay a 5 percent tax to the government.

Mar'ie said the land and building purchase tax was introduced to compensate local administrations' possible loss in revenue from various levies and local taxes as regulated by the local tax and levies law, which would come into force May 23.

The government has targeted in the 1998/1999 draft state budget to collect Rp 3.4 trillion in property taxes, with Rp 2.9 trillion from the land and building ownership tax and Rp 500 billion from the land and building sales tax. (rid)