JAKARTA. The government recently is planning to impose three types of tax to counter the acts of the rentiers of land investment. Those three types of tax include the progressive tax on land ownership, capital gain tax on land transactions, and unutilized asset tax on idle land.
"Those tax schemes may apply in a cumulative manner,” said Coordinating Minister of Economic Affairs Darmin Nasution during a dialogue on Equitable Economic Policy, Thursday (2/2). In other words, the ownership of a plot of land, which is being left idle, will be concurently imposed with two types of tax, namely progressive tax and unutilized asset tax.
Furthermore, the government will impose a progressive tax for the possession of more plots of land . “If you sell the land, you will be imposed with land transaction tax in the form of capital gain tax. The tax will be imposed on the added value of the price of a plot of land. This is almost similar with income tax,” Darmin said.
According to Darmin, the government needs to make this policy, on the grounds that the current tax system is likely to favor the capital-intensive businesses. Let alone, the buyers and sellers tend to reduce the value of taxable transaction.
However, Darmin did not explain the scale of the tax tariff, as well as the detailed definition of the idle land. The government is targeting to implement a more euqitable land tax scheme in 2019. Under the equitable land tax scheme, the buyers and sellers of property will pay taxes according to the value of the transaction.
Head of Fiscal Policy Agency Suahasil Nazara added, similar with capital gain tax, the existing final income tax is basically taxing the difference in price, but not in an optimum manner.
Executive Director of CITA Yustinus Prastowo suggests to divide the basis for imposing the tax on unproductive land into two categories, First, based on unproductive land ownerwhip and the excessive ownership. Second, a higher tax may be imposed on a plot of land or building, which is sold within less than a five year of ownership, as this can be considered as speculative action.
Economist at Bank Mandiri Anton Gunawan estimates, this policy may prevent the bubble land price that may lead to a collapse.
(Muhammad Farid/Translator)
