Jakarta, Feb 2 (Antara) - A lot of people practice speculative buying of lands to resell them for a big margin years later, but this practice has led to many plots of land staying idle.
Intensive infrastructure development such as roads, turnpikes and ports by the government encourages speculators to purchase lands near these projects with hopes that the land prices would certainly skyrocket in future.
Hence, the government is considering imposing a progressive tax on idle lands, in an effort to discourage speculative buying and to boost the utilization of lands for economic activities and other productive purposes.
Minister for Agrarian Affairs and Spatial Planning Sofyan Djalil believes that the imposition of progressive tax on idle lands will be useful to reduce speculative buying of lands.
"The idea behind imposing progressive tax is to eradicate speculative buying of idle lands, Djalil said on Monday (Jan 30). He added that the rising land prices lure speculators to purchase them. He added that the lands were in fact idle because they were neglected by their owners and thus become unproductive.
Now, the Fiscal Policy Agency (BKF) of the Finance Ministry is conducting studies on the imposition of a progressive tax on idle lands to boost their utilization, so that they would be more efficient and productive.
"We are trying to examine the details on what mechanism and types could be used. We will discuss it with the agrarian affairs and spatial planning ministry," Head of BKF Suahasil Nazara said in Jakarta last month.
Nazara said it was quite possible for the government to impose a progressive tax on idle lands, because there were many people who had already invested on lands but utilized them in a very limited way
However, the BKF has yet to discuss it in detail. But in principle, the move underlines the desire of the government to impose tax on idle lands so that they would be cultivated and become more productive.
The tax could serve as an incentive or even disincentive for land owners, as it could stimulate them to use the land optimally for productive purposes.
According to Djalil, the speculation through investment on land will not benefit the people. If speculators buy lands, they will earn benefits for their own; but if they save their money in banks, it will be useful for others who can borrow them for productive purposes.
The more people spend money on land speculations, the higher the price of lands will become. This will pose problems for young people seeking to buy houses.
Hence, the government will control the lands so that price of houses will be lower and within the financial budget of the people. This can be done to accommodate the interest of industries and infrastructure.
"If people come to know that the government will be purchasing lands for infrastructure development, then the speculators will seize the opportunities to buy the land first," Djalil said on Wednesday (Feb 1).
Thus, the acceleration of land registration to obtain land certificates is important as it will make the land ownership status clear. "In this way, investment on land would no longer be attractive for speculators to buy them," Djalil added.
The minister explained that the increase in land price would encourage the speculators to purchase them.
For this, the government is thinking of imposing a progressive tax on the margin of land price so that economically the land will have benefits. If the price of a plot of land is Rp10 thousand per square meter and if it is resold at Rp100 thousands per square meters, then the margin of Rp90 thousand will be subject to the progressive tax so that people would no longer speculate in buying lands.
Djalil hoped that land ownership in Indonesia would provide huge benefits to development and increase investment, which is useful for the creation of employment and economic activities.
Therefore, the government is formulating its idea to impose the progressive tax, so that land utilization would not create distortion but provide added values with high productivity.
"If one has Rp1 billion and he or she saves it in a bank, then the money can be used by others. Thus, the money will have benefit. But if he or she uses it to buy a plot of land and resells it later at a price of Rp2 billion, then the 100 percent profit will be taxed," Djalil noted.
In the meantime, researcher of the Institute for Development and Economics and Finance (Indef) Shinta Dwi Nofarina said the government's plan to impose a progressive tax on idle lands will, if implemented, reduce speculative land buying activities.
"This policy is good because it could halt land speculators. Now, speculative buying of lands is rampant, causing the price of lands to continue rising at a faster pace, reaching 20 to 25 percent every year," Nofarina said on Monday (Jan 30).
The progressive tax imposition could also stimulate land owners to cultivate or use their lands so that they would become more productive and result in multiple benefits for economic activities.
The utilization of idle lands can be used, for instance, to boost the government's one million house development program or to stimulate the activities of farmers in the regions.
"If land is used to develop business, it could also absorb workers," Nofarina noted.***3***
(T.A014/A/BESSR/A/Yosep)
(T.A014/A/BESSR/A. Abdussalam) 02-02-2017 18:13 |
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