Polemic on Fishery Non-tax Revenue Policy

Kompas

Didie SW

The soaring imposed levies and taxes in the fisheries and marine sector are increasingly threatening the capture fisheries industry.

Government Regulation (PP) No. 85/2021 concerning the types and tariffs of non-tax state revenue (PNBP) at the Maritime Affairs and Fisheries Ministry has been effective as of 19 Aug.

In the previous regulation, tariffs were levied only on preproduction, while the new regulation implements three formulas in tariffs imposition – namely preproduction, postproduction and contract systems.

Another difference is that the object of levy on fishery products (PHP) for fishing vessels was previously only those with a size of 30 gross tonnage (GT) and above. The new regulation, while maintaining the same tariffs, extends the preproduction levy range. A 5-60 GT fishing vessel is subject to a 5 percent tariff, 60-1,000 GT a 10 percent tariff and 1,000 GT and above, a 25 percent tariff.

The preproduction tariffs are valid until 31 Dec. 2022, after which the postproduction tariffs apply. They are chargeable to all sizes of fishing vessels up to 60 GT, including those under 5 GT, with a 5 percent tariff, while for 60 GT vessels and above the tariff is 10 percent.

In addition to imposing more extensive levies, the Marine Affairs and Fisheries Ministry has issued a decree No. 86/2021 on the fish price benchmark (HPI) and No. 87/2021 on the productivity of fishing vessels.

Too high raises

Through the decree, the government has decided to increase the productivity component and the standard fish prices, which has since drawn complaints from capture fisheries business actors because of the subsequently higher levied tariffs. It is possible that many vessel owners will decide not to pay and choose to stop operating their fishing vessels.

The 5 to 10 fold increase of tariffs in 2015 for fishing vessels of 30 GT and above seemed to be insufficient to boost revenues from capture fisheries, so an easy shortcut has been taken by increasing the levies on the other two components.

Looked into further, not all productivity components have increased. There is also a significant decrease of 41.67 percent of vessels with pole and line fishing gear from 1.8 down to 1.05.

On the other hand, there are those whose productivity has increased significantly by 34.67 percent, such as squid fishing from 0.75 to 1.01. Likewise, tuna longline productivity has increased by 25.33 percent from 0.75 to 0.94.

Fluctuation in productivity is common, but its reports must be based on transparent data on the average catches, which must be disclosed to the public and discussed with fishermen with a view to drawing up a fair benchmark in determining productivity figures and catch composition.

Those that have affected the increase in levies on fishery products are the other two tariff components, with the HPI being more dominant in non-tax tariff hikes.

Government Regulation No. 85/2021 does not alter tariff components. It only mentions an extensification on the size of the vessel. Those that have affected the increase in levies on fishery products are the other two tariff components, with the HPI being more dominant in non-tax tariff hikes.

This is because, when we analyze the Maritime Affairs and Fisheries Ministry’s decree No. 86/2021, the price benchmark for all fish species have been raised significantly, except for prawns. The price benchmark of grooved tiger prawn has decreased by Rp 1,000 (US$0.70) per kilogram.

KOMPAS/RADITYA HELABUMI

Tuna of various sizes is peddled in one of the traders\' stalls at the Fandoi Fish Market, Biak Numfor Regency, Papua, Friday (1/10/2021).

Interestingly, despite the significant decrease in the pole and line productivity, the levies on fishery products continued to increase 1.03 times per gross tonnage due to the increase in the price benchmark, but the levy increase per gross tonnage for the pole and line fishing appears to be the lowest among all types of fishing gears. This levy discretion may have taken into account the fact that the pole and line fishing is categorized as an eco-friendly fishing practice.

The price benchmark for squid has increased almost five times from Rp 16,000 to Rp 75,000. It turns out the highest percentage increase, followed by albacore tuna at almost 400 percent, and yellowfin tuna at 300 percent.

The simultaneous raise of the fishing productivity and the fish price benchmark has a very significant impact on per gross tonnage levies. For example, for a 100 GT squid fishing boat, the levy is Rp 699 million or Rp 7 million per gross tonnage. Previously, it was Rp 120 million or only Rp 1.2 million per gross tonnage, up 5.83 times (583 percent).

Given the provisions in government regulation No. 19/2006, the currently imposed levies for squid fishing vessels have increased tremendously by 58 times, or 5,829 percent.

For tuna longline fishing vessels above 60 GT, the gross tonnage tariff has increased from Rp 1.2 million to Rp 4 million (338 percent).

This will cause a decline in the relatively eco-friendly tuna longline fishing, which will result in the acceleration of tuna extinction. Hopes to restore the past heyday of tuna longlining in the Indonesian Exclusive Economic Zone (ZEEI) and the free seas will be dashed.

Fishermen\'s protests

The many fold hikes in levies have begun to draw protests, initially from the West Kalimantan fishermen association. It has rejected levy increases by hundreds of percent, and this is expected to reverberate throughout Indonesia.

The assumed benefactors of the fishing vessel productivity composition have also become the source of complaints by fishing industry actors.

For example, a large pelagic purse seine fishing gear where eight percent of the catches is grade A yellowfin tuna has seen its HPI increasing to Rp 60,000.

Likewise, the prices of fresh fish and frozen fish are different even though they are both grade A.

This is certainly not in accordance with the fact that the prices of the netted fish and the hooked fish have a gaping disparity. Likewise, the prices of fresh fish and frozen fish are different even though they are both grade A.

Another example is the inclusion of bluefin tuna in the composition of tuna longline catches, but this species only exists in certain areas, such as southern Java and Bali, while in other areas there is no bluefin tuna at all.

The peculiarity in assuming the HPI and fish catch composition as shown by the Maritime Affairs and Fisheries Ministry indicates that public consultations have not been effective. They may have had some communication, but these were not sincere and the fishermen’s aspirations were ignored.

The three components of fisheries non-tax tariffs, namely fishery capture levies, productivity and the HPI, weigh on the preproduction and postproduction tariffs. What should have been adjusted periodically were components of productivity and the fish price benchmark, not tariffs.

It turns out that the faltering previous policy of raising the levied tariffs by 5-10 times has led to new issues, while the adjustment for productivity and HPI was reasonable.

Because the tariff had previously increased significantly, the productivity and HPI should not have been included in the component hike list. Fishermen are protesting the increase in the HPI, which has resulted in them having to pay hiking levies by hundreds of percent.

The provided slogan that the non-tax levies are implemented for the sake of fishermen’s welfare, is not well received and the protests continue to spread widely. They say they cannot afford to pay the levies and choose to halt their fishing vessel operation.

DOKUMENTASI KEMENTERIAN KELAUTAN DAN PERIKANAN

The Ministry of Maritime Affairs and Fisheries has secured two Vietnamese-flagged fishing vessels that stole fish in the Republic of Indonesia State Fisheries Management Area (WPPNRI) 711 North Natuna Sea, Monday (5/4/2021).

This ironically contradicts the spirit of the Jobs Creation Law, which aims to encourage investment and create jobs.

It is a paradox to fish resources — which has an abundance of production, but ironically, the export of fishery products is minimal, and the pursued income rise in fishery non-tax revenues, which has been pushed, which is also still minimal.

In fact, the non-tax revenues from capture fisheries in 2020 was quite high compared to the budget realization by the directorate general of capture fisheries, which reached 11.20 percent.

However, if capture fisheries non-tax revenues are expected to offset the ministry\'s budget, each of the directorate general and agencies should be targeted as “profit centers” so the Rp 5.26 trillion deficit can be overhauled.

Fishing business actors, apart from having to pay fisheries levies, are also subject to many other types of levies and taxes, ranging from sea tax, value added tax (VAT) for the purchase of fuel, regional retribution, VAT for fish transportation services, fish sales tax, employee income tax as well as profit tax.

They also have to face risks of fluctuating catches influenced by the weather, seasons as well as the wandering nature of the fish. This factor should have been taken into account by policy makers. They should not increase tariffs arbitrarily.

There should be a prior study on the impacts of a proposed policy. A policy should not provoke the fishermen into ceasing their fishing activities because of them being unable to pay levies of fishery products.

The most recently enforced policy will have a broad impact on the supply for the processing industry, fish market prices, competitiveness, foreign exchange for exports of fishery products and employment opportunities.

Fishing needs controls and checks as part of the efforts to make Indonesia prosper, but do not add to the burden on fishermen who are currently being impacted by the Covid-19 pandemic.

Raising tariffs is like hunting in a zoo, showing uncreative efforts that anyone would easily be able to do. The fisheries ministry would be better to focus on how to make policies that are able to encourage business actors to utilize fish resources in the ZEEI and the free seas in an optimal and sustainable manner so that the increase in non-tax revenues can be achieved. For that, strategies must more creative and realistic through extensification of fishing areas beyond territorial area.

Hendra Sugandhi, Deputy chair of the Fisheries Committee of the Indonesian Employers Association (Apindo)

(This article was translated by Musthofid).