Tax break facility welcomed, graft feared
Tax break facility welcomed, graft feared
Leony Aurora , The Jakarta Post/Jakarta
Economists praised the government's decision to provide tax
breaks for companies donating aid to tsunami victims in Aceh and
North Sumatra, but warned of the possibility of corruption.
The incentives should encourage more aid for the affected
areas and benefit the government, the companies and most of all
the victims, said Aviliani of the Institute for Development of
Economics and Finance on Wednesday.
However, she stressed that clear mechanisms were needed to
determine the incentives to avoid abuse.
"It is possible that somebody who donates Rp 1 billion
(US$107,238) could claim to have donated Rp 5 billion," she said
as an example.
The government issued a ministerial decree on Tuesday giving a
tax cut to companies that donated part of their profits to
victims of the tragedy.
To be eligible for the tax break, companies must obtain a
receipt from the people or institutions that receive the donation
and attach the receipt to their annual income tax bill.
Economist Chatib Basri, however, said concerns over possible
corruption should not keep donations from getting to people who
need help.
"(The possibility of corruption) is unavoidable. However, we
should still try to implement the incentives," he said.
After the 2002 bombings in Bali decimated the island's tourist
industry, the government waived income taxes for companies on the
island for a year.
Meanwhile, Nina Sapti Triaswati, an economist at the
University of Indonesia, said the government should expand the
tax breaks to cover donations to victims of other natural
disasters.
"The ministerial decree only applies to Aceh and North
Sumatra. What about Alor? What about Nabire?" she said, referring
to two regions recently affected by earthquakes.
A powerful quake measuring 6.4 on the Richter scale devastated
the East Nusa Tenggara island of Alor on Nov. 12, killing more
than 30 people, damaging about 17,000 buildings and leaving
50,000 people homeless.
In Nabire, Papua, a powerful earthquake took 32 lives and
caused Rp 500 billion in material losses.
The number of victims in Aceh and North Sumatra has risen to
more than 36,000 as more corpses are recovered from beneath the
rubble and mud.
Nina said tax regulations should be standardized concerning
the severity of natural disasters that qualify for tax benefits.
In addition, she said, funds used for social activities such as
education, research and development also should be deductible.
"Developed countries have such tax incentives," she said.
Chatib challenged her position by saying expanding the
incentives too much would cut into state revenue.
Even before the Aceh tragedy, the government was in dire need
of funds to plug the hole in this year's state budget.