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Bali Leaders Urge VP to Declare Green Belts Tax-Free

Rising Property Taxes in Bali are Threatening Bali's Agriculturally-based Culture.

(6/2/2010) Tourism and general development pressures in Bali are rapidly usurping traditional agricultural lands. The "land rush" to own a piece of Bali is inflating property prices across the island, creating an insupportable tax burden on farmers tending the few remaining green belts.

According to The Bali Post, Indonesian Vice-President Boediono was pressured by the Regent of Gianyar during a recent visit to grant agricultural lands a tax-free status. The Gianyar Bupati (Regent), Tjokorda Ardana Sukawati, told a meeting between Bali's other regents, governor Pastika and the Vice-President, "We, as the government, are not conscious of the fact that we add to the burden of farmers by enforcing high property (PBB) taxes."

Reminding the meeting that only the central government can eliminate the property tax, he warned that the farming class will eventually become extinct. Sounding a similar note, Professor Nyoman Suparta of the Indonesian Farm Owners Association (HKTI) said he hoped the central government would reduce the tax burden borne by farmers and help stem the conversion of agricultural lands to other purposes.

Every year an estimated 800 hectares of productive agricultural land is converted to other uses. As a result, the inheritance of Bali's agricultural heritage to the younger generation is becoming increasingly rare. Suparta added: "This is a big problem for Bali. If the government does not overcome this dilemma, not only will agriculture be destroyed but eventually tourism will be crushed because farming is the foundation of the cultural underpinnings of the island's tourism. "

The Vice-President admitted the stiff competition taking place between the tourism and agricultural sectors is evidenced by the shrinking share of the contribution made by farming to the gross domestic product of the province. Saying the both problem and its solution were problematic, Boediono said new regulations were needed to maintain some economic balance between tourism and farming in Bali.

In response to the call to remove property taxes paid on agricultural land, Boediono said the government was examining the idea of relinquishing all power over property taxation to the provincial government. "We will leave it to the provincial government to decide tax rates for farmers working in green belt areas," Boediono added.