Jakarta. The Finance Ministry stood firm Tuesday on its decision to implement taxes ranging up to 75 percent on nightclubs, spa facilities, karaoke houses, and bars, despite facing opposition from industry stakeholders.

Lydia Kurniawati, the ministry’s director of regional taxes, justified the move by arguing that these leisure service providers cater to a specific demographic, implying that the policy would not significantly impact low-income families.

"Their specialized services are intended for a specific demographic, not the general public," Lydia said during a press conference held at the Finance Ministry building in Jakarta.

The new tax rates, ranging from 40 percent to 75 percent, came into effect on January 5, following joint decisions by the government and the House of Representatives, with input from various stakeholders, she added.

In contrast, taxes on other entertainment businesses were capped at 10 percent. This includes cinemas, beauty contests, art exhibitions, motor racing competitions, horse races, circuses, sports games, zoos, and massage parlors.

Hariyadi Sukamdani, chairman of the Indonesian Tourism Industry Association (GIPI), equated the new tax to a covert attempt to "kill the industry."

“These taxes are unreasonably high. Does the state intend to dismantle the industry?” Hariyadi questioned during a recent press conference.

“The industry generates a substantial number of jobs that don’t require high education, playing a crucial role in supporting the people’s economy,” he added.

He alleged the absence of a scientific study on the contribution of the affected entertainment businesses to the national economy before the tax hike was imposed.

The Indonesian Spa & Wellness Association had previously filed a motion to the Constitutional Court challenging the tax policy.

Former singer Inul Darastita, who owns karaoke houses, took to social media to express discontent with the tax increase from previously 15 percent.

“How was the new tax range of 40-75 percent calculated? Should we share the burden with our customers?” she questioned on X, mentioning Tourism Minister Sandiaga Uno.

Inul claimed that the number of her employees had dropped from around 9,000 to 5,000 since the Covid-19 pandemic, stating that her business wouldn’t survive under the new tax regime.

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