Taxes Strangle Jakarta's Entertainment Industry
The Jakarta Municipal government's move to hike taxes to the entertainment industry has dealt a heavy blow to entertainment businesses' revenues. This move, which was initiated in 2015 during the reign of the then-governor Basuki Tjahaya Purnama, aimed to achieve a target of Rp 45.32 trillion (USD 3.2 billion) in municipality tax revenue.
Since 2015, the entertainment tax has increased from 20% to 25% under municipality law. This tax is levied on goods and services at predominantly nocturnal venues such as clubs, bars, karaoke joints. Meanwhile, an even higher tax (35%) is levied to goods and services at massage parlors, saunas, and spas.
This had led to industry-wide critique and protests from the entertainment sector. Represented by Asphija (Association of Entertainment Enterpreneurs in Jakarta), entertainment business owners claim that the policy is killing the industry, closing down businesses since 2015. The association is also planning to file a formal complaint with the city council to the now-governor of Jakarta, Anies Baswedan, with hopes of a review in the policy to reflect the entertainment business needs connected to its dwindling revenues. A plan also echoed by Johnny Simanjuntak, and Indonesian politician from the Democratic Party of Struggle (PDI-P).
However, the city administration has refused to take blame for the decline in the nightlife sector, claiming that in fact the downturn was most likely caused by inefficient business managements that could not cope with economic slowdown that had impacted the country's economy as a whole.
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