Tourists Fear New 40% Entertainment Tax In Bali Will Ruin Vacation Fun

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Indonesia is set to make a whopping increase to the country’s entertainment tax.

The national entertainment tax will now range from 40-75%, and entertainment businesses in Bali and the tourism sector are unhappy about it. 

There are genuine fears that this steep hike in Indonesia’s entertainment tax will negatively impact businesses nationwide.

The goods and services tax for the entertainment sector (PBJT) applies to discos, karaoke, nightclubs, bars, steam baths, and spas.

This 40% tax will be applied to tourists’ bills at nightclubs, spas, some beach clubs, and other specific entertainment venues.

Without a doubt, budget-conscious Bali lovers will start looking elsewhere for a vacation destination if more fees are applied to the tourist experience in the province.

This year sees the introduction of the Bali tourism tax, an additional IDR 150,000 per person; this is on top of the visa-on-arrival fee, which sits at IDR 500,000. 

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Tourists are already discussing amongst themselves how Bali is not as affordable as it once was. With Bali lovers chatting online about the rising prices of a bottle of water, a classic Bintang beer, and entry tickets to top attractions, a 40% tax chucked on top of what is supposed to be a fun day out on vacation will likely ruin the mood. 

The General Treasurer of HIPMI Bali, Agung Bagus Pratiksa Linggih, spoke to reporters about the proposed legislative changes.

He has mixed feelings about the massive tax increase and noted that it may not be the right option in the long run, especially since Bali is only just recovering from the impacts of the pandemic. 

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Linggih told reporters, “The government must prove that Bali’s tourism services and facilities are number one in the world, then it can justify the highest tax value in the world.”

He added, “Our competitiveness against other tourism destinations is reduced because we charge high prices without adequate facilities. Bali’s main competitor is Thailand, which has actually reduced entertainment taxes by up to 5% because Thailand is aware that tourism in its country supports high taxes.”

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The General Treasurer of Bali spoke candidly and told reporters, “I don’t think this policy is the right alternative. There should be a relaxation of taxes and an increase in government spending.”

“This is actually a recession, instead of increasing taxes and reducing government spending by 15%. MSMEs, especially in Bali, will be the victims. Not to mention, tourists will be charged for waste management later.”

Up to 70% of initial funds generated by the Bali tourism tax will be sent to solving the island’s waste management issues. 

He continued, “Bali is currently recovering; this policy actually has a bad impact. Moreover, our image has just been tarnished due to last year’s New Year’s traffic jams. Society is already having difficulties, and it is getting more and more difficult.”

“The first victims are the lower middle class, especially MSMEs. One thing that must be underlined is that Bali is not overloaded with tourists. The hotels in North Bali are only 50% full. With this law, economic equality is hampered because only Badung and Gianyar benefit.”

“Tourists will be lazy about exploring because of the high costs, resulting in regional income inequality getting worse.”

These entertainment taxes would make it more costly for tourists and Indonesian citizens to enjoy nightlife entertainment.

This mirrors the government’s desire to promote more high quality, high spending, and sustainable tourism, making it more costly to go out drinking and parting in Indonesia, inherently discouraging lower-budget tourists who want to get drunk and party.

However, the implications are more wide-reaching than that. 

It is not only the General Treasurer of Bali who is dubious about the 40% entertainment tax but big players in the tourism industry too.

Celebrity lawyer, TV host, and businessman Hotman Paris, the co-founder of Atlas Beach Club in Canggu, has also spoken out about how a 40% entertainment tax would impact travelers’ capacity to enjoy their time in Bali to the max.

Hotman Paris and his legal teams are planning to submit a judicial review to the Constitutional Court (MK) if President Joko Widodo does not heed the pressure to issue a Perpu (emergency legislation) to stop the new rates being introduced. 

Paris told reporters, “The fastest solution is Perpu because if you wait too long for the material test, even before the election, Mr. Jokowi will provide something that will really help the people,” 

“Because the tourism industry is a sector that is enjoyed [by everyone], not large-scale industries such as coal, gold and banking. It is a people’s industry,” he said.