More taxes to fund state spending<\/p>\n
JAKARTA (JP): The government unveiled yesterday its 1996-1997
\nfiscal year spending plan, which features a hefty 16 percent
\nincrease to be financed chiefly through more taxes.<\/p>\n
Presenting the draft budget to the House of Representatives,
\nPresident Soeharto warned that the economy is overheating because
\nof the rapid growth of the past year.<\/p>\n
However, Soeharto defied earlier predictions that the
\ngovernment would go for an austere budget. Instead he pushed for
\na big spending increase which he hopes will sustain the economic
\ngrowth rate above seven percent.<\/p>\n
He set total expenditure at Rp 90,616 billion ($39.4 billion)
\nin the fiscal year starting on April 1, up from the Rp 78,024
\nbillion budgeted for 1995-1996.<\/p>\n
To finance its spending plans, the government hopes to collect
\nRp 14,120 billion from oil and gas taxes, Rp 64,082 from non-oil
\nand gas domestic revenues, and Rp 12,413 billion in foreign aid.<\/p>\n
Consumers, individual and corporate tax payers, property
\nowners and exporters will underwrite most of the increases in
\nstate spending. The government envisages a 23 percent increase in
\nincome tax revenues, a 31 percent increase in value added tax
\nrevenues, a 260 percent increase in export tax revenues and an 18
\npercent increase in land and property tax revenues.<\/p>\n
The increase in tax revenues is expected to come from the
\nexpanding and intensifying of tax collection.<\/p>\n
\"Although tax revenues have risen quite substantially, they
\ncan and must be raised even higher,\" the President said. \"We
\nbelieve that we have not yet reached all taxpayers and that not
\neveryone registered as a taxpayer has been paying taxes in full.\"<\/p>\n
He pointed out that the tax revenue share of the state budget
\nin Indonesia is still very low compared to the levels reached in
\nneighboring countries.<\/p>\n
Expenditures<\/p>\n
The draft budget stipulates Rp 56,113 billion for recurrent
\nexpenditures, including payment of the salaries of its more than
\n4.5 million employees, and foreign debt servicing, as well as Rp
\n34,502 billion for development, representing a 12 percent hike.<\/p>\n
Servicing the government's foreign debts will gobble up about
\nRp 19,936 billion ($8.66 billion) of the government's revenues,
\nan 11.4 percent increase over the 1995-1996 figure.<\/p>\n
Soeharto made no mention of whether civil servants would see
\ntheir salaries increased this year. The matter will be discussed
\nwhen the House deliberates the budget, he said.<\/p>\n
The government's savings, or the amount of its domestic
\nrevenues left after deducting recurrent spending, are expected to
\nincrease in 1996-1997 to Rp 22,089 billion from the Rp 19,024
\nbillion envisaged for this fiscal year.<\/p>\n
This, together with Rp 12,413 billion in foreign aid, gives
\nthe government Rp 34,502 to spend on its development programs.
\nThe money is allocated on the basis of the government's
\npriorities, with regional development, transmigration and
\ntransportation getting the lion's share.<\/p>\n
The budget plans assumes an average oil price of $16.5 a
\nbarrel and that Indonesia's oil production will average 1.52
\nmillion barrels per day, while the dollar-exchange rate is
\nprojected at $1=100 yen. Changes in any of these assumptions
\ncould severely undermine the government's targets.<\/p>\n
But while the budget appears to be aimed at sustaining
\neconomic growth, the government can be expected to resort to
\nmonetary instruments to cool down the overheating economy.<\/p>\n
Worries<\/p>\n
Soeharto pointed out at two worrying symptoms: inflation that
\nhas been running above 5 percent for the last three years, and
\nthe growing deficit in the current account, which measures the
\ncountry's trade in merchandise and services.<\/p>\n
\"We have to watch the impact on the balance of payments of
\nforeign commercial loans, especially short-term ones, the number
\nof which has increased quite substantially,\" he said.<\/p>\n
Current account deficit will shoot up $7.94 billion in the
\n1995-1996 fiscal year, compared to the $4.09 billion originally
\nenvisaged, because of a 32 percent increase in imports,
\nparticularly of consumer goods, while export growth expanded more
\nslowly, at 19 percent.<\/p>\n
Soeharto said the government's foreign exchange reserves, now
\nat $15.4 billion, are adequate to finance import needs for five
\nmonths.<\/p>\n
To narrow the current account deficit, Indonesia will have to
\nbolster its export performance, he said.<\/p>\n
He ruled out imposing import controls, given Indonesia's
\ncommitment to an open and free market economy, but said imports
\nshould be geared to supporting Indonesia's export activities.<\/p>\n
He appealed to the people's nationalist sentiments, urging
\nthem to give locally made products priority over imports.<\/p>\n
\"We must all close ranks -- the government, entrepreneurs and
\nconsumers -- to form a strong and unified front to face this
\nchallenge,\" he said.<\/p>\n
\"We must always remember the motto: `Love the Nation, Love its
\nProducts',\" he said, adding that this is not contradictory to the
\nfree trade principles to which Indonesia is now committed.<\/p>\n
The President also underlined the need to limit credit
\nexpansion which has been growing \"too fast\". (emb)<\/p>\n
Salary -- Page 2<\/p>\n
Editorial -- Page 4<\/p>\n
Text -- Page 5<\/p>\n
Policies -- Page 9<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/more-taxes-to-fund-state-spending-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }