New tax key to curbing poverty, say experts

Environmental experts at the recently-completed international conference entitled “Bali in Global Asia: Between Modernization and Heritage Formation”, have highlighted the disincentive and incentive taxation policy as the most reasonable but politically challenging solution to halting the island’s uncontrollable tourism development.

“In Bali, it is the little people [locals residents and farmers] that support the temples and the rice fields and maintain sacred spaces. How do you make sure those people can live reasonably and aren’t perpetually left in poverty if you don’t have progressive taxation for high-end profit businesses and cross-subsidies for the farmers?” said Carol Warren, associate professor at the Asia Research Center of Murdoch University in Australia. Warren was speaking as part of the agriculture and environment panel of the conference at Udayana University in Denpasar.

Warren recalled a case several years back when a five-star hotel in Sayan negotiated everything with the banjar (neighbourhood organizations) around their resort, by promising employment, donations and support for the temple. “But across the Ayung river, across the gorge, those banjar that figured their rice field views had been stolen by the hotel were not involved in the negotiation. They put plastic bags all over their rice fields and threw Molotov cocktails across the gorge so that they were finally brought to the negotiation table,” she said.

As the practice of corporate social responsibility (CSR) tends to be voluntary, Warren pointed out that the government needed to plan a progressive taxation policy for business entities making large profits, to protect the environment and farmers affected by tourism development.

A lecturer at Undiknas University and a former activist of the Bali-chapter of the environmental NGO WALHI, Agung Wardana, said that the paddy farmers of the Jatiluwih rice fields in Penebel still had to pay their own land taxes although the site, which was named a national cultural heritage area and recently an UNESCO world cultural heritage area, had welcomed around 300-400 tourists daily.

Agung said that the land tax burdening the Balinese farmers had surged every year because the government had yet to implement a clear zoning policy that differentiated the island’s sacred sites from its business, industrial and green zones.

The provincial administration issued Bylaw No. 16 on Zoning and Spatial Planning in 2009 but its implementation remained stalled as the island’s nine regencies, except Denpasar, had not created implementing regulations of the bylaw in their respective regencies.

“The first thing that must be carried out to implement a progressive tax or an increase in tax rates for commercial areas such as hotels and golf courses is the clear determination of zones. I think the directorate general of taxation and officials from Bali province and regencies have to sit together to identify the areas to be subsidized,” said Agung.

“However, whether these regencies acknowledge the zoning and spatial planning bylaw remains a question,” said Agung, adding that according to the Law no. 26/2007 on Spatial Planning, regencies should have taken forward implementing regulations three years after the national law was issued.

“These regencies are now buying time by conducting more and more land conversions [from farms to commercial use],” said Agung.