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Catholics criticize Indonesian plan to tax schools

Institutions struggling to make ends meet will be made to suffer, educational experts warn

Catholics criticize Indonesian plan to tax schools

Children attend classes at Good Shepherd Catholic Elementary School in Abepura, Papua, in this 2018 file photo. (Photo: Ryan Dagur/UCA News)

Catholic groups in Indonesia have criticized a draft bill that would impose a tax on educational services, which the government claims is part of efforts to spur economic recovery following the slump caused by Covid-19.

The bill proposed by the Ministry of Finance to parliament to amend the 1983 tax law would mean educational services would no longer be exempt from taxation.

Speaking during a webinar involving Catholic school administrators and finance ministry officials on June 13, Franciscan Father Vinsensius Darmin Mbula, head of the National Council of Catholic Education, condemned the draft, calling it impossible to apply to Catholic schools that are not profit-oriented.

"Catholic schools are a form of church service, which are managed to implement the government's mission to educate the nation," he said.

He said the financial status of Catholic schools is diverse and although there are schools with good finances, surplus wealth is usually distributed to poorer schools.

"This is part of the implementation of the principles of solidarity and subsidiarity. If taxes are imposed it will have a knock-on effect, especially on the poorer schools since many have been hit by the Covid-19 pandemic," Father Mbula told UCA News.

To be able to pay teachers and other staff will be more difficult if they have to cope with the burden of taxation

Opposition to taxation has also been voiced by Islamic organizations.

Arifin Junaidi from Nahdatul Ulama — Indonesia’s largest Muslim organization which oversees 21,000 schools — said most of its schools are in remote and disadvantaged areas where tuition fees are low.

"To be able to pay teachers and other staff will be more difficult if they have to cope with the burden of taxation," he said.

Haedar Nasir, chairman of Muhammadiyah — the second-largest Islamic organization — said the draft bill was unconstitutional as the charter mandates that every citizen has the right to an education, every citizen is obliged to attend basic education and the government is obliged to pay for it.

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Yustinus Prastowo, an adviser to Finance Minister Sri Mulyani Indrawati, told the webinar that the draft would be deliberated in the lower house of parliament and would not be implemented in the near future.

He said the draft was prepared within the framework of tax reform, which invites all parties to help the economy recover.

Prastowo said the country needed to extricate itself from debt. Other sectors exempted from tax will also lose that status, he said.

However, Prastowo said, implementation of taxes will not be uniform for all, and there will be exceptions for the education sector as it is a social one and not profit-oriented.

"The government will look at what parameters to implement here," he said.

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