Will Indonesia Try a Site Value Tax?
Indonesia Plans to Tax Forestry Companies
JAKARTA - Indonesia's Forestry Minister Muslimin Nasution said the government would impose heavy taxes on forestry companies in a move to reduce their holdings on large forests.
"The president has agreed to impose progessive taxes on forestry companies, who hold large hectarages of forest," he told reporters after a cabinet meeting headed by President B.J. Habibie.
"The decision will affect the holders of rights on more than 3.5 million hectares of forest," Nasution said. "This decision is aimed at reducing the holdings of forest by several companies. We can't break the rules but we can impose taxes. My ministry will calculate how much the tax will be.
"We expect the firms will give up holding large areas of forest," he said.
Nasution said the government would give potential small scale firms and cooperatives living in forest areas licenses to become forestry operators.
Conglomerates currently hold most of Indonesia's 51.5 million forestry concessions, with Barito Pacific among the largest, holding around 2.7 million hectares.
Forest fires hit Indonesia in 1997 and 1998, particularly in Sumatra and Borneo, causing a regional environmental disaster and enveloping much of southeast Asia in smog for weeks. The World Wide Fund for Nature (WWF) said the fires affected five million hectares, mostly forest and small scale plantations.
Observers blamed the fires partly on conglomerates, saying they were conducting unsustainable forest management and were only interested in profits.
Nasution said his ministry was still investigating alleged corruption in the forestry industry.
"We believe there is a lot of corruption in forestry. The president has ordered forestry to be put in order without any exceptions," Nasution said.
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