Universities want tax incentives
Urip Hudiono, The Jakarta Post, Jakarta
Educators are asking the House of Representatives to consider giving greater tax incentives for higher education institutions on Rp 145 trillion (US$14.5 billion) of taxable items in the sector.
The Indonesian Forum of Rectors said during a hearing on Monday with the House committee deliberating amendments to the tax laws, that among the potential taxable items that could be considered for reduction or exemption, was the Rp 72.4 trillion in national university educational spending, the Rp 40 trillion from public participatory funds and the Rp 10 trillion of state budget allocation for higher education.
"We are suggesting that this be considered because universities are, in essence, non-profit institutions, and that the saved funds can be used for better development of higher education institutions," said the Forum chairman Wibisono Hardjopranoto.
Along with the Forum, the House committee also invited the Indonesian Private University Association (APTSI) and the Indonesian Council of State University Rectors (MRPTNI), to hear their opinions on the deliberation of the tax amendment bills.
The government has proposed a revision of the country's three tax laws -- on general tax arrangements and procedures, on income taxes and on Value Added Taxes -- to help increase state tax revenues and improve the country's business and investment climate.
Similarly speaking, APTSI chairman Suharyadi explained what universities particularly needed at present was also the exemption of import duties on textbooks and laboratory equipment grants.
"We do not mind taxes on the income of faculty personnel, but if possible, not on income taxes of the university as an institution," he said, suggesting as well how private sector contributions for educational purposes should be made tax- deductible to encourage more funding for universities.
Meanwhile, MRPTNI chairman Radi A. Gani indeed said how taxes on laboratory equipment grants had become a burden to universities and hindered academic activities.
"We sometimes have to pay hundreds of millions of rupiah for a piece of equipment that was actually given to us for free. In the end, we sometimes have to reject such gifts because we do not have the money to pay the taxes," he explained.
Radi went on to add that the government could consider the proposed tax incentives as "compensation" for its present inability to provide 20 percent from the state budget for the education sector as required by law.
Next year's state budget has earmarked about Rp 35 trillion, still less than 10 percent, for the education sector. By gross domestic product (GDP), Indonesia spends about 1 percent of its GDP on education, as compared to Malaysia's 5.8 percent.
As a result, members of the Forum noted, just 14 percent of Indonesia's population aged between 19 and 25 years were presently in college, as compared to 24 percent in the Philippines and as high as 75 percent in South Korea.