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Elimination of Fiscal Tax to Impact Bali Tourism

Tourism Community Concerned that Indonesian Domestic Travelers May Forsake Bali When Rp. 1 Million Fiscal is Eliminated in 2010.

(9/29/2007) As reported on balidiscovery.com the Government has announced its intention to eliminate by 2010 the Rp. 1 million (approximately US$106) fiscal tax charged each time an Indonesian national or resident travels abroad. [See: Fiscal Tax to End?]

While the promised change is widely welcomed by many Indonesians and their ASEAN neighbors who insist the current tax restricts free movement and regional trade, elements of Indonesia's tourism community have begun expressing their concerns for what effect the change in policy will have on domestic tourism.

The Chief of Tourism for Denpasar's Tourism office, Drs. I Putu Budiasa, told BisnisBali that the removal of the fiscal tax will cause domestic tourists now coming to Bali to move their holiday destination abroad.

With domestic tourism estimated to comprise 52-54% of Bali's tourism business local hotels, restaurants and tourist attractions have become dependent on the income produced by Indonesian visitors. Cheap regional airfares offered by low-cost carriers and the removal of the fiscal tax have many tourism companies worried that Indonesians may find the draw of an overseas holiday too strong to resist.

To illustrate the argument, Bisnis Bali points out that the prices for a short holiday in Bali or Singapore, including airfare and hotels, are similarly priced at Rp. 2.5 million (approximately US$270). It is feared that the 2010 elimination of the fiscal tax will remove current price disincentive for Indonesians holidaying abroad, thereby drawing an important business segment away from Bali.