New tax bill expected to slash business cost
New tax bill expected to slash business cost
JAKARTA (JP): Legislators started their first round of debates
yesterday on a government-sponsored bill on local taxes, user
levies and service fees which they expect will slash high
business costs.
Simon Patrice Morin of the House of Representative's Golkar
faction said yesterday the bill should clearly define the
responsibility of the central government and provincial, city and
regency administrations.
"This way, there would be no overlapping responsibility, no
double taxation... and the need to increase economic efficiency
through the streamlining of various levies could be achieved," he
said when presenting his faction's view on the bill.
House members of the United Development Party, Golkar,
Indonesian Democratic Party and Armed Forces presented their
views on the bill to Minister of Finance Mar'ie Muhammad at a
plenary session.
Mar'ie was accompanied by his staff, including Director
General of Tax Fuad Bawazier and the head of the ministry's
Financial and Monetary Assessment Agency, Marzuki Usman.
The House members gave their views on three other government-
sponsored bills: on taxes on transfer of ownership of land and
buildings; on the collection of taxes using distress warrants;
and on the taxation court.
Mukrom As'ad of the United Development Party faction said the
bill on local taxes, user levies and service fees should clearly
stipulate that the government's administration services must be
free of user levies or service fees.
"This means nobody has the right to ask for a fee on public
(administrative) services provided by the government," he said.
Mukrom said officials often illegally collected user levies or
service fees for public services or licensing procedures.
"These illegal fees sometimes exceed the revenues from legal
levies. This is also the reason why local taxes and user levies
or service fees have become a national issue and a major cause of
the high costs in the economy ," he said.
Mukrom praised the bill's provision which stops private
companies and individuals "helping" local governments collect
taxes, user levies or service fees.
He said the growth of regional tax revenue was much slower
than the growth of central government receipts from nationally-
administered taxes. The ratio between national tax earnings and
gross domestic product (GDP) in the 1994/1995 fiscal year was
12.8 percent.
The ratio between provincial tax earnings and regional GDP was
1 percent, and between city/regency tax revenue and regional GDP
was 0.9 percent.
The annual growth of tax revenues in the Fifth Five-Year
Development Program which ended in 1994 was 26 percent for the
central government, 23.9 percent for provincial administrations
and 21 percent for city/regency administrations.
The annual growth of user levies and service fees for the same
period was 26 percent for provincial administrations and 17.8
percent for city/regency administrations.
Setyadji Lawi of the Indonesian Democratic Party faction said
the public had long awaited a ruling which specifically
administered local taxes, user levies and service fees.
"Businessmen and other users of government services are often
confused with the wide variety of local taxes and levies imposed
on them. The problem is the imposition often is not based on
clear criteria," he said.
"All they know is that for every service provided by local
officials, there is a certain payment -- whether this is in the
form of illegal fees, user levies, contributions or service fees.
There are really no clear-cut differences between the levies,"
Setyadji said.
He said the government should improve taxation procedures and
mechanisms.
"What is happening now is that there are no standard
procedures and this loophole has often been exploited by local
officials to impose user levies or collect service fees from the
public," he said. (pwn)