Ferry Mursyidan Baldan: The land tax has become excessive

TEMPO.CO, Jakarta - The government's plan to eliminate taxes on land and buildings has been challenged by a number of regional leaders because of concerns it will reduce their revenues. But that has not fazed Agrarian Minister Ferry Mursyidan Baldan, who is concurrently chairman of the National Land Agency (BPN). This politician from the National Democrat Party believes the policy will benefit low-income people. "But those who can afford it, must still pay the taxes," he told Tempo reporter Akbar Tri Kurniawan, last week.

What is the main reason for this policy?

We want to resolve the complexity of the land issue, which happens from its certification, its right to use, including the rights of communal or traditional societies to use forest land or land in cities. This has caused many conflicts.

Why is the land issue so complicated?

Because the levies imposed on land has become excessive. There's taxation on land and buildings, on getting the right to use and costs of ownership transfer when a sale is completed. We want to simplify it, and the most likely tax to be erased would be the land and building tax (PBB).

Who is qualifed to be exempted from the PBB?

We propose that those who cannot afford to pay, be exempted.

How would you define 'cannot afford to pay'?

When two years in a row, the land owner asks for a reduction of taxes, we consider him unable to pay. His request for a reduction would be an initial measure.

Aren't you worried this might be abused?

This tax exemption will be given under very tight verification, for example, proof of monthly income. We will also look at the size of the income tax filed.

Who makes the verification?

The official who regularly visits each house to collect the PBB can also be the verifier. That can already be started.

Why do you say that the PBB-exemption can halt the capitalization of land and buildings?

This policy will provide some security for home-owners, particularly those living in big cities. Many people feel the pressure of having to pay their PBB obligations, because they can't really afford it.

Yet some regents and mayors have rejected your proposal.

Can they only raise taxes from people? Besides, exempting poor people from paying their land-building taxes does not significantly impact on their revenues.

So how do you suggest they make up for the loss?

They should go after people who don't pay taxes at all.

Have the consequent costs of this policy been calculated?

We will do that later. Right now, the philososphy is most important. We hope the central government and local administrations can work together in the same framework, and that is to ease the burden of poor people.

What other countries have applied such a policy?

Germany is one of them. (*)