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Viewing cable 06JAKARTA5242, INDONESIA POSITION ON FRENCH "SOLIDARITY TAX"

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Reference ID Created Released Classification Origin
06JAKARTA5242 2006-04-27 00:53 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Jakarta
VZCZCXRO6032
RR RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHPB
DE RUEHJA #5242/01 1170053
ZNR UUUUU ZZH
R 270053Z APR 06
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 3270
INFO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS SECTION 01 OF 02 JAKARTA 005242 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EIND EAIR AFIN APEC ID
SUBJECT: INDONESIA POSITION ON FRENCH "SOLIDARITY TAX" 
 
REF: STATE 60006 
 
1. (SBU) Summary.  The Government of Indonesia (GOI) does 
not support the French proposal for an internationally- 
endorsed "solidarity tax" on air travel for development 
funding (Reftel), nor does the GOI levy airline ticket 
taxes for any other non-aviation purpose, according an 
official at the Ministry of Transportation (MOT). 
Indonesia funds airport operations through taxes ranging 
from Rp 30,000 (USD 3.40) for domestic departures to Rp 
100,000 (USD 11) for international departures.  Indonesian 
citizens and foreign non-diplomatic residents must make a 
Rp 1 Million (USD 114) income tax "prepayment" every time 
they travel outside of the country by air.  Revenues from 
this tax are not allocated to a specific sector and flow 
into the central budget.  Indonesia has no dedicated taxes 
to fund tourism, and taxes are not generally designated 
from a specific sector to fund specific development 
projects.  End Summary. 
 
Indonesia Does Not Support Airport Tax 
-------------------------------------- 
 
2. (SBU) We met with Lilien Ambarwiyati, Deputy Director, 
International Air Transport, Directorate General of Air 
Communications in the Ministry of Transportation (MOT) on 
April 18 regarding the French proposal seeking APEC support 
for an airline ticket tax to support development. 
Ambarwiyati stated that the GOI and airlines in Indonesia 
would not support the French proposal, especially since the 
cost of airline tickets is already expensive for the 
average Indonesian passenger, and the tax would unfairly 
burden the airline industry.  Ambarwiyati said she first 
learned of the French proposal following the APEC 
conference in Korea last year, when the Ministry of Finance 
(MOF) sought an opinion on the matter from the MOT. 
Minister of Transportation Hatta Rajasa responded with a 
letter to the MOF opposing the measure.  However, 
Ambarwiyati was uncertain whether the GOI has taken a 
public position on the issue. 
 
3.  (SBU) When we described the reasons the U.S. opposes 
the tax, Ambarwiyati replied that "it seems the U.S. and 
Indonesia agree on this."  She also noted that during the 
ASEAN Air Transportation Committee meeting last year, 
members informally shared similarly negative views of the 
proposal.  However, ASEAN members Vietnam and Thailand 
nonetheless signed the declaration last September in 
support of further work on a "solidarity contribution". 
 
Current Taxes Related to Travel 
------------------------------- 
 
4. (SBU) Indonesia has a departure tax at its airports to 
help finance operations.  Amounts vary from airport to 
airport and are most expensive at Jakarta's Soekarno-Hatta 
International Airport (Rp 100,000 or USD 11 for 
international, Rp 30,000 or USD 3.40 for domestic). 
Revenues from the tax go to the MOT.  In addition, 
Indonesia has a visa-on-arrival charge for tourists of USD 
10 for a three-day visa and USD 25 for a 30-day visa, which 
must be paid in U.S. currency.  Indonesian citizens and 
non-diplomatic foreign residents must also make a hefty Rp 
1,000,000 (USD 114) income tax "prepayment" known as 
"fiskal" when they travel internationally by air.  This 
means that an airline ticket to neighboring Malaysia, for 
example, can be less expensive than the departure tax. 
Before the riots of 1998, the departure tax was Rp 250,000 
(about USD 28 at today's exchange rate).  Former President 
Soeharto imposed the tax during this troubled time to 
discourage departures from the country.  Subsequent 
administrations did not lower the tax.  Indonesia's high 
departure tax means that some choose to travel to 
neighboring Singapore or Malaysia by ferry via the 
Indonesian port of Batam, where the departure tax is only 
Rp 50,000 (USD 57). 
 
5. (SBU) Revenues from departure tax and visa-on-arrival go 
through the Directorate General of Immigration, under the 
Ministry of Law and Human Rights and eventually make their 
way to the central GOI budget.  Indonesia has no dedicated 
taxes to fund tourism, and the GOI does not generally 
dedicate revenues from individual taxes to specific 
development projects. 
 
6. (SBU) Comment:  Additional taxes on air travel would be 
a blow to Indonesia's already ailing tourist sector, which 
has declined significantly in the wake of the October 2005 
Bali bombing and rising concerns about avian influenza. As 
a relatively junior deputy director, Ambarwiyati will not 
 
JAKARTA 00005242  002 OF 002 
 
 
control the final decision on this issue.  However, she 
does wield significant influence as the lead official at 
the MOT over the fee structure of international air 
transportation. 
 
PASCOE