Following howls of protest from consumers and vendors alike, the Jakarta administration distanced itself on Friday from a plan to impose a 10 percent tax on food stalls in the capital.
Governor Fauzi Bowo said on Friday that he had instructed the city tax office to review the regulation before enacting it, a move likely to slow implementation to a crawl. He said more study was needed.
“I want the policy to be reviewed before imposing it,” Fauzi said. “I don’t want to make a decision that hurts the little people.”
Arif Susilo, the head of the regulation division at the tax office, said it would consider adjusting the income limit higher in order to exempt wartegs (small vendors) from the tax.
“We will discuss the right formula and report back to the governor,” Arif said.
Public protests quickly mounted when news broke on Thursday that the tax hike would hit the collective lunch box by January. City officials had reasoned that food vendors were part of the city and should pay their share.
Vendors countered that they were working hard just to scrape by and the new tax would be an unfair burden.
“My regular customers are construction workers. If I were to raise the prices, where would my business go? To be honest, I am confused as to why they would impose a tax on a food stall like this,” Darnawi, a warteg operator, said on Thursday.
The tax would apply to any warteg with annual income of Rp 60 million ($6,660), as well as restaurants, cafes, bars and small catering businesses. The measure is now with the Home Affairs Office on its way to becoming a bylaw after the council endorsed it.
Arif said the city would still look for tax potential from small caterers. “We will make exceptions for small-level catering services as we are still studying the matter,” he said.
Triwisaksana, deputy chairman of the City Council, said the policy needed careful study because food-stall customers were mostly middle- to low-income people and the stalls already faced “non-formal” levies in the form of street-level bribes.
“The City Council will review the bylaw before implementation,” he said. “But we will try to find legislation to make it easier on stall owners.”
Triwisaksana said there were more than 20,000 wartegs here that would be affected.
“I think most of them can reach up Rp 5 million in income per month. That means the tax would really affect them and the consumers,” he said.
Husna Zahir, the head of the Indonesian Consumer Protection Foundation (YLKI), called the policy “anti-people.”
Eating, she said, is a basic need and in this case, wartegs are a necessity for a great many people.
“What is the basis?” she said. “Food stalls don’t even have clear financial accounting practices.”
Husna said the city could better raise tax revenue by improving collections from high-end restaurants.
“Don’t burden people with policies that hurt their daily livelihood,” she said.
( Yup, and also no need to create opportunities to level "protection money" by certain undesirables! * my comment ofcourse*)
vr 3 dec 2010 - 20:58