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JAKARTA. Ministry of Finance is finalizing the plan for implementing progressive tax for idle land ownership. This regulation is expected to be implemented in this year.
Minister of Finance Sri Mulyani claimed that the policy has been discussed with President Joko Widodo and Minister of Agrarian and Spatial Planning. “This may resolve the discrepancy, productivity, and tax’s issues. Therefore there are many strategic issues related to land,” she said, Monday (23/1).
Head of Vice Presidential Expert Staffs Sofjan Wanandi even said that the regulation on progressive tax of idle land will be released in an immediate time. “I hope that the discussion will be settled in February 2017,” Sofjan said, Tuesday (24/1).
According to Sofjan, the technical aspects of this regulation would be further discussed by Ministry of Finance with other related ministries. Sofjan said that the regulation has to be clear to prevent the disruption on property business.
Meanwhile, Coordinating Minister of Economic Affairs Darmin Nasution still could not make further comment related to this plan. He has not conducted deep analysis whether the policy will match with the existing laws.
The plan to impose progressive tax is part of the instructions of President Joko Widodo. During cabinet meeting at Bogor Palace in the early of last month, President Joko Widodo stressed that the equality will be the focus of government’s working agenda in 2017.
The equalization programs include asset redistribution and land legalization. President Joko Widodo said that the government has to focus on concession for people, customary land, and land certification for people. This program will be conducted massively within two years ahead.
Therefore, Minister of Agrarian and Spatial Planning Sofyan Djalil is planning to revise Law on Land. This revision aims at optimizing the land’s productivity. Sofyan said that the government will impose progressive tax on idle land.
According to Sofjan, the problems on land ownership have been accumulated due to lack of evaluation.
Head of Fiscal Policy Agency (BKF) at Ministry of Finance Suahasil Nazara claimed that the imposement of progressive tax aims at optimizing the productivity of idle land.
Suahasil admitted that he is still reviewing the plan before it is implemented. Suahasil said that BKF will explain the mechanism in a detail manner. “We will discuss (the mechanism) with the Ministry of Agrarian and Spatial Planning,” he said, Tuesday (24/1).
The policy will be related to Land and Building Tax and Income Tax at regional and central levels, respectively.
Executive Director of Center for Indonesia Taxation Analysis (CITA) Yustinus Prastowo said that the government may impose progressive tariff on Income Tax, as well as Land and Building Tax in annual basis and transfer transaction basis, respectively.
However, according to Yustinus, the government needs to set the threshold to ensure fairness in implementing this policy. Let alone, tax is a policy instrument of equalization and redistribution to create fairness.
Yustinus suggests that the tariffs can be determined by estimating the land ownership or land utilization. In this case, a higher tariff may be imposed on the progressive ownership when the land is sold in a certain period, while in terms of land utilization, the higher tariff will be imposed to idle land.
Yustinus hopes that the regulation is prudently prepared. If it is really implemented, the regulation will contribute additional revenues to the state, as well as improve economic productivity and reducing the social gaps. (Muhammad Farid/Translator)
