Indonesia Tourism Sector Alarmed by Proposed Tax Hike
Jakarta – A chill swept through Indonesia’s tourism industry this week as the government proposed a sharp tax increase on entertainment services. Businesses warn the move could devastate a sector struggling to recover post-pandemic. The proposed tax rate hike would raise entertainment taxes from 10% to 40-75%. The policy would target tourism-linked services like hotels, restaurants, bars, spas, and tourist attractions.
The news sparked alarm among Indonesian tourism operators and workers. They fear the tax burden could force mass closures of businesses already devastated by COVID-19. Siti, a single mother working at a Jakarta hair salon, worries she could lose her job if the tax causes the salon to shut down. “I provide for my family with this work,” she said. “This tax will take away our livelihoods.”
Industry groups estimate the tax hike could eliminate up to 3.5 million Indonesian tourism jobs. They note entertainment services stimulate the economy, investing in local goods and employing millions. The Indonesian Tourism Association stated: “This tax threatens to undermine tourism development and ruin low-income workers.” It called for wider stakeholder consultation before finalizing policies.
The government argues the increased revenue would fund health and social programs. But critics point out that hiking taxes on struggling businesses could backfire by reducing overall tax income. As Southeast Asia’s largest economy, Indonesia attracted over 16 million visitors in 2019. The country is eager to fuel tourism’s revival and capitalize on its stunning natural assets.
With the future of Indonesian tourism in the balance, stakeholders hope pragmatic policies will prevail. The government must carefully weigh tax impacts on businesses and households still rebuilding from COVID’s fallout. With cooperation and vision, a win-win approach can be charted to nurture tourism’s recovery for Indonesia’s long-term prosperity.
