New tax on property

According to Fuad Bawazier, director general of taxes (Bisnis Indonesia, Oct.7), the government is devising a tax to be levied on the title transfer of land and buildings. Transfers of titles will be subject to a tax of 5 percent of the sale price. The bill will be submitted to the House of Representatives in April 1997.

The community should know that existing taxes connected to land and building transactions are already a sizable burden: a. An annual tax on land and buildings, amounting to 0.5 percent of the sales value of the tax object. b. A capital gains tax if an owner is deemed to have made money from the sale of property. The tax is 5 percent of the sale value of the tax object. c. A 10 percent Value Added Tax calculated on the developer's selling price of new buildings. The cost is borne by the buyer. This regulation also applies when a person constructs and uses his own building.

The government should not take lightly the levying of a new tax on land and building transactions. I ask the House not to approve the bill on the title transfer because the new tax will be a real burden for the people.

If one refers to the 1993-1998 Broad Outlines of the State Ideology (GBHN), it mentions that double taxation must be avoided. The government and the House should adhere to this stipulation in the GBHN. The outlines should not have a mere decorative role. The people should not be continuously squeezed. Instead, collect taxes, especially from the rich people, by applying more intensively the regulations already in force. Do not extend too generously tax facilities in a discriminative way like the one granted recently, because the implied tax subsidy will become a burden to the state budget.

SUHARSONO HADIKUSUMO

Jakarta