Entertainment Tax Hike Could Raise Unemployment in Jakarta, Says Councilor

TEMPO.CO, Jakarta - The Jakarta provincial government’s decision to increase the entertainment tax to 40 percent has been met with rejection from various parties, including the Jakarta Legislative Council (DPRD) Speaker Prasetyo Edi Marsudi.

Prasetyo Edi urged the city administration to reconsider the impact of the tax hike amid growing concerns that the policy would cause entrepreneurs to go out of business, leading to a drop in regional revenue (PAD). 

“If it makes entrepreneurs go bankrupt, where will our revenues come from? This needs to be reviewed,” he said in an official statement on Wednesday, January 17.

He asked the relevant authorities to look for the best measures to anticipate the effects of this policy, such as possible layoffs of workers. He stressed that waves of layoffs could increase the unemployment rate in the capital. “I will discuss this at the Rapim (leadership meeting) with Bapenda (Regional Tax Agency),” he added.

The councilor, known as Pras, said that increased unemployment would hamper the regional government's efforts to improve community welfare. “The regional government should make a wise decision, [they should first] look at the demographics. If all the entrepreneurs are hit by a 40 percent [tax], their [businesses] will be gone. They will close down and there will be lots of layoffs,” Prasetio Edi said.

As previously reported, the Jakarta provincial government raised the tax on entertainment establishments, including discotheques, karaoke lounges, nightclubs, pubs, and spas, to 40 percent from 25-35 percent under Regional Regulation (Perda) No. 1 of 2024, which was signed by Acting Jakarta Governor Heru Budi Hartono on Jan. 5, 2024.

MUTIA YUANTISYA

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