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The government's plan to charge value-added tax for the use
of electricity beyond 1,300 watts has been criticized, with one group
calling the decision borne of political interests.
Indonesian Chamber of Commerce and Industry (KADIN) vice chairman Chris
Kanter told The Jakarta Post on Wednesday the government wanted to
"play it safe" by not increasing prices to keep up with the current
global economic recession.
"But it's better to make a bold decision by increasing prices and
explaining the real situation to the public rather than creating such a
policy (charging tax) that can't be implemented," he said.
The administration of President Susilo Bambang Yudhoyono had earlier
pledged not to increase power tariffs through 2009 when its term ends.
The House of Representatives' Commission VII overseeing energy and
mineral resources has also criticized the policy, saying the government
should introduce the policy to the public before implementing it.
The new tax would mainly affect middle-class households and
small-medium enterprises.
Currently, value-added tax is already imposed for electricity use above
6,600 watts, affecting mostly factories and offices.
Director general for taxation Darmin Nasution said the plan to impose a
10 percent tax was still being discussed in detail.
However, he said the initiative did not come from his office.
"The plan is being discussed within the framework of the revision to
this year's state budget," Darmin said as quoted by Antara on Wednesday.
With this policy, the government expects to generate Rp 2.1 trillion
(US$229 million) in tax revenue this year, helping to lower the
electricity subsidy without increasing electricity tariffs.
The policy would go with the new progressive-rate billing system and
begin in May, and would reward households that keep 2008 consumption to
80 percent of 2007's national average electricity consumption.
Household power capacity is currently grouped at either 450, 900, 1,300
or 2,200 watts.
PLN subsidizes household electricity use, which accounts for almost 90
percent of total national electricity use.
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