BOGOR. The government has determined to reduce economic and social gaps. Vice President Jusuf Kalla on Tuesday (31/1) issued Equitable Economic Policy to reduce the gaps.
The policy includes three main programs, namely land-based policy, opportunity-based policy, and human resources improvement. “Those programs will prioritize the equitable,” said Coordinating Minister of Economic Affairs.
The land-based equitable program seems to be the most attractive program among those three programs. This program is expected to restrict the speculators’ maneuvers by revising the scheme of land’s buy and sell transactions from taxable value scheme to capital gain tax scheme.
Aside of revising the scheme, the government would impose unutilized asset tax over the idle land. This is expected to encourage the utilization of the idle lands. Let alone, to date, the transaction tax paid by the lands’ buyers and sellers tend to be lower than it should be paid based on the value of the actual transaction.
Minister of Agrarian and Spatial Sofyan Djalil added, recently the government is considering some mechanisms of progressive tax over idle lands. In this case, the government would impose progressive tax to the some groups that control a large amount of assets and capitals, as well as gain huge profits over the idle lands. This is an affirmative policy to create sources of funding to support disadvantaged groups.
As a part of this policy, the government will impose a higher tax on the difference between the increases in land prices. For example, people buy a plot of land with the current price of Rp 10,000 per square meter (m²). When the sale price goes up to Rp 100,000 per m², the difference of Rp 90,000 would be imposed with progressive tax, Sofyan said.
Ministry of Agrarian also considers to impose progressive tax over land ownership. “We are still formulating the mechanisms on estimating (the tax) and considering excluding industrial and housing land bank zones,” he said.
Tax observer at Danny Darussalam Tax Center (DDTC), Darussalam said that the plan to impose progressive tariff rates on idle land will bring up the issue of the definition of land ownership. Different tariff rates will create a space for tax planning. "In other countries, the idle lands are imposed with land value tax (LVT). It is also progressive," said Darussalam. LTV refers to the value of the land, not including buildings.
Secretary General of Central Advisory Board of Real Estat Indonesia (REI) Totok Lucida said that REI will ask the government to clarify this plan. According to Totok, for property developer, the land is considered as business capital. Therefore, REI asks the government to involve the institution in formulating the regulation.
(Muhammad Farid/Translator)
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