Government issues 41 new decrees on tax and regional autonomy<\/p>\n
JAKARTA (JP): The Finance Ministry said on Monday that it had
\nissued 41 new decrees, including 38 new tax and excise decrees,
\nin a bid to meet the government's 2001 state budget revenue
\ntargets and to support the decentralization program.<\/p>\n
The statement, issued by the Finance Ministry, provided few
\nspecifics regarding the content of the new decrees.<\/p>\n
However, it did outline that the 37 new decrees concerned
\nchanges relating to new tax cuts, tax facilities, excise on
\nalcoholic beverages and a luxury sales tax on cars.<\/p>\n
The statement specified several decrees aimed at boosting
\ninvestment activities. They concern the reduction of income taxes
\non bond revenues at stock exchanges, income taxes on construction
\nservices, and the provision of tax facilities to tax payers
\ninvesting in certain businesses or regions.<\/p>\n
Another decree requires the government to pay interest rates
\nto tax payers on the excess of their obligatory tax payments if
\nthe directorate general of tax fails to return the excess amount
\nor fails to issue notification of the excess amount on time.<\/p>\n
\"The interest rate (for the excess tax amount) is set at 2
\npercent a month and will take into account tax debts first,\" the
\nstatement said.<\/p>\n
Some of the decrees regulate the writing of financial reports
\nin foreign languages and the use of currencies other than rupiah,
\nthe statement said.<\/p>\n
Under the new decree on luxury taxes the government will
\ninclude the imposition of a 75 percent luxury tax rate for cars
\nwith engine capacities of more than 4,000 cubic centimeters (cc),
\nand a 50 percent luxury tax on cars with engine capacities of
\nbetween 3,000 to 4,000 cc.<\/p>\n
A new decree relating to the excise tax on alcoholic beverages
\noutlines that the government will increase the levy in phases,
\nthe ministry said.<\/p>\n
For instance, excise taxes on locally made and imported
\nbeverages containing up to 1 percent of alcohol will be raised up
\nto Rp 1,250 per liter.<\/p>\n
Excise taxes on locally-made and imported beverages,
\ncontaining between 1 and 5 percent of alcohol, will be raised to
\nRp 2,050 and Rp 2,500 per liter respectively.<\/p>\n
Among the new decrees are those concerning revenue sharing
\nbetween the central and regional governments, as stipulated by
\nthe Intergovernmental Fiscal Balance Law No. 25\/1999, which was
\nimplemented on Jan. 1 this year as part the decentralization
\nprogram.<\/p>\n
The ministry, however, did not provide details of the decree.<\/p>\n
Under the Intergovernmental Fiscal Balance Law, the government
\nhas to give local governments a greater share in the revenue from
\nthe exploitation of natural resources in the regions.<\/p>\n
With a shrinking revenue base, the government is facing a
\ntough challenge to meet this year's tax revenue target of Rp
\n154.2 trillion (about US$16.2 billion).<\/p>\n
The government has already come under fire for issuing two
\nregulations last month, hiking the tax rate on interest received
\nfrom bank term deposits, as well as imposing value added taxes on
\nagricultural and animal husbandry products.<\/p>\n
Under the new tax policies the government increased tax rates
\non interest earned from bank term deposits to 20 percent from 15
\npercent, and imposed a 10 percent value added tax on agricultural
\nand animal husbandry products. Both regulations have been in
\neffect since Jan. 1.<\/p>\n
It is unclear whether the two new regulations were part of the
\n41 decrees the Finance Ministry has issued.<\/p>\n
Finance Minister Prijadi Praptosuhardjo said he would look
\ninto various public objections against the new tax policies
\nbefore deciding whether to review them.<\/p>\n
\"We don't know yet whether we must delay (the policy). First
\nwe'll have to look at all the inputs,\" Prijadi told reporters
\nafter a post-Idul Fitri gathering on Monday. (bkm)<\/p>",
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