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Legislators, editors reject tax on reading materials

Jakarta Post - June 28, 2002

Kurniawan Hari, Jakarta – In an effort to lower book, newspaper and magazines prices, editors and legislators on Thursday agreed to demand the government remove the imposition of value-added tax (VAT) on reading material.

They said getting rid of the tax would bring down the prices of newspapers, magazines, and books which would boost sales and increase reading among the public.

Deputy Chairman of House Commission I for broadcasting and media Effendy Choirie pledged his commission would soon discuss the matter with the Minister of Industry and Trade and the finance ministry's director general.

VAT accounts for 10 percent of the prices of printed material. It means an additional cost for readers.

Leo S. Batubara of the Association of Newspaper Publishers (SPS) said the total amount of VAT paid by newspapers to the government was Rp 140 billion last year. As of June this year, he said, the amount had reached Rp 70 billion.

"Knowledge should not be taxed," Leo said. He added the high prices of newspapers were also to blame for their low circulation.

There are about 566 publications in Indonesia, but only 30 percent of them are profitable. Home to more than 210 million people, Indonesia's daily newspaper circulation stands at 4.8 million copies, far below the United Nations Educational, Scientific, and Cultural Organization's (UNESCO) ideal daily circulation of 22 million copies.

Chief editor of Media Indonesia daily Saur Hutabarat suggested the public should not be required to pay VAT on books and newspapers. "Books and newspapers educate the public. Therefore, there should be no need to impose VAT on those items," said Saur.

Chief editor of Kompas Suryopratomo and deputy chief editor of The Jakarta Post Endy M. Bayuni agreed with Saur that the VAT must be dropped. "VAT has raised the prices of books and newspapers," said Suryopratomo.

A number of legislators clearly expressed their support for the removal of value-added tax imposed on books and newspapers. "Tax on knowledge is senseless. This must be removed," said legislator Astrid S. Susanto.

During the hearing, legislators also questioned the performance of Antara state news agency. Head of Antara Mohammad Sobary said he had decreased the agency's deficit from Rp 7 billion to Rp 2.3 billion and fired several employees found guilty of embezzlement and fraud.