Aditya Suharmoko and Alfian , The Jakarta Post , Jakarta | Mon, 08/18/2008 11:51 AM | Business
The government plans to be aggressive in its hunt for more taxpayers among businesses to help finance the expansive state budget proposed for next year.
With tax proceeds forecast to account for 70 percent of state revenue next year, the Finance Ministry's directorate general of taxation has included companies in the palm oil, coal, construction, real estate, pulp and paper, consumer finance, retail, banking, port services and restaurant industries as the new cash cows.
"We will count on more business sectors, especially those that will experience a boom next year," said director general of taxation Darmin Nasution, who has been a confidant of Finance Minister Sri Mulyani Indrawati since the 1980s.
The directorate will also intensively map taxpayer profiles and set benchmarks for certain sectors and industries in the hope of getting a clearer picture of the amount businesses should pay in taxes and of minimizing tax evasion.
"We will adopt a combination of several approaches to try to collect more taxes.
"Aside from higher economic growth and commodity prices, which will contribute to an increase in taxes, we also hope our tax intensification and extension program will help boost the state coffers," Darmin said.
Despite its population of 230 million, Indonesia has only six million registered taxpayers, of which 2.4 million pay taxes regularly. This number comprises 1.3 million individual taxpayers and 1.1 million institutional taxpayers, according to the directorate general of taxation.
The government expects to collect Rp 726.3 trillion (US$79.7 billion) in total tax revenue next year, up by 19.2 percent from the Rp 641 trillion expected for this year.
Of the total taxes, the domestic tax target is set at Rp 697.8 trillion, up from Rp 580.2 trillion forecast for this year. Domestic tax excludes import and export duties.
In the draft 2009 budget, forecast income tax is set at Rp 364.4 trillion, up 19.48 percent from the Rp 305 trillion in the 2008 state budget.
Income tax from the non-oil and gas sector, which is used as a benchmark for corporate performance, is set at Rp 298.7 trillion, up from Rp 251.4 trillion this year.
The government also raised its target from value-added tax to Rp 245.4 trillion from Rp 195.5 trillion.
Revenue from excise is targeted to increase slightly to Rp 47.5 trillion from Rp 45.7 trillion, indicating the government is unlikely to raise excise rates next year.
In the draft 2009 budget, the government expects the finance, real estate and services sectors to become the leading contributors to income tax in the non-oil and gas sector.
The manufacturing sector is expected to be the second largest contributor.
Economist Faisal Basri said he believed tax revenue would be greater if the government paid more attention to the problems faced by the labor-intensive manufacturing sector, which was supposed to be the key to economic growth.
A growing manufacturing sector will not only contribute taxes institutionally but also individually as it could open the way for more workers to pay taxes, thus increasing the size of the taxpayer base, he added.
Indonesian Chamber of Commerce and Industry chairman M.S. Hidayat said the government should protect the manufacturing sector from the high-cost economy to help businesses offset the high prices of raw materials.
"The high-cost economy costs businesses between 10 percent and 15 percent more. If there is no high-cost economy, businesses can contribute more to tax revenue," Hidayat said.