Existing rulings need reviewing to narrow tax gap

JAKARTA (JP): Existing regulations must be reviewed to narrow the tax gap between the central government and regional administrations, officials say.

"We must review all the regulations to balance tax revenues between the regional administrations and central government," said Warsito Rasman, the director general for the development of regional autonomy of the Ministry of Home Affairs, in a seminar at the University of Indonesia here on Saturday.

In fiscal 1992-1993, local administrations' receipts from their regions' own sources contributed only about 23.95 percent of their total revenues. The other 61.73 percent of receipts was contributed by the central government. The revenues from regional sources consisted of 73.99 percent from local taxes and 15.79 percent from other levies.

Warsito also said that overlapping in taxation has taken place, in which taxpayers are charged by both the central and local authorities.

This usually occurs in the case of levies for company- registration and the establishment of apartments and condominiums, he said.

Favor

On the same occasion, Fauzi Alvi Yasin, the head of the Jakarta revenue office, said that the present system is more inclined to favor the central government in terms of tax collection.

"This has forced municipal authorities to rely on various levies which are not really lucrative," he said.

Although Jakarta's municipal revenues this year are projected to grow by more than 28.8 percent from last year's Rp 727 billion (US$ 34.6 million), the city must still rely on politically unpopular levies, including radio taxes.

According to municipal rules passed in 1990, the regional radio tax is charged on a flat rate of Rp 3,000, regardless of the type and price of the radio. The city's revenue office expects to collect Rp 1 billion from radio taxes in fiscal 1994- 1995.

Susiyati Hirawan, the chairperson of the regional financial research of the Ministry of Finance, also stressed the importance of a review of existing regulations to prevent overlapping of regional and central taxation.

Susiyati said that the country's highly centralized political system will always favor fiscal regulations which support such a system. (hdj)