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Bali's Economy Could Crash If Entertainment Tax Rises to 40%: PHRI

22 January 2024 21:17 WIB

TEMPO.CO, Jakarta - Chairman of the Indonesian Hotel and Restaurant Association (PHRI) of Badung Regency, I Gusti Agung Ngurah Rai Suryawijaya, argued that the economy on the island would collapse if the entertainment tax is raised to 40 percent from previously 15 percent.

Recently, the government decided to increase the tax on entertainment establishments, such as discotheques, karaoke lounges, nightclubs, bars, and spas by 40 to 75 percent based on local policies. The increase was stated in the law on financial relations between the central and regional governments, which was issued in 2022.

Suryawijaya underlined that all entrepreneurs in the entertainment sector opposed the tax increase. “We have just experienced a recovery period, so I think the 15 percent tax is more than enough,” he said at the office of the Coordinating Ministry for the Economy, Jakarta on Monday, January 22, 2024.

According to Suryawijaya, the tax increase is remarkably high, and tour operators have questioned the policy.

Suryawijaya also expressed concern that the tax hike would lead to a decrease in tourist visits. “This will surely cause the economy in Bali to collapse again like during [the COVID-19 pandemic] because 60 percent of the people are highly dependent on the tourism sector.”

He mentioned that about 5.28 million tourists visited the island throughout 2023, exceeding the regional government's target of 4.5 million tourists. Based on this, he shared his optimism that the regional income could still increase even if the entertainment tax is not increased.

“Frankly speaking, nearly 1.2 million of Bali's 4.3 million residents work in the tourism sector and subsectors, so this needs to be decided carefully,” said Suryawijaya.

AMELIA RAHIMA SARI | ANTARA

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