Government not to revise VAT receipt target

JAKARTA (JP): Director General of Taxation Fuad Bawazier affirmed yesterday that the target for value-added tax (VAT) revenue in the 1997/1998 fiscal year would not be revised despite the drop in tax receipts in the last fiscal year ending yesterday.

"There will be no revision of the VAT revenue target for the 1997/1998 budget," Fuad told journalists when accompanying legislators in observing taxpayers trying to beat the deadline yesterday for the filing of their 1996 annual income tax returns at Taman Sari and Gambir tax offices, Central Jakarta.

At a recent hearing of the House budgetary commission, Minister of Finance Mar'ie Muhammad reported that direct and indirect tax receipts were estimated at Rp 55.8 trillion (US$23 billion) last fiscal year, 0.3 percent lower than the target.

The decline was caused mainly by a drop in VAT receipts which were Rp 1.395 trillion short of the target of Rp 21.788 trillion.

VAT receipts were estimated to contribute Rp 20.39 trillion, or 6.4 percent of the target but income tax revenue reached Rp 25.49 trillion, 7.5 percent higher than the target.

Mar'ie said the decline in VAT receipts was caused by the government's policy to exempt the domestic shipping industry and docking services from value-added tax.

In addition, Fuad said yesterday, the government had disbursed Rp 2.8 trillion in VAT refunds to exporters and Rp 900 billion in income tax refunds last fiscal year.

"The amount of refunds is truly large, but that is part of our tax system, which gives special treatment to exporters in VAT refunds," Fuad was quoted by Antara as saying.

Fuad noted that the collection of taxes under his directorate general's jurisdiction -- mainly VAT, income tax and property tax -- had been higher than the targeted revenue.

The tax office collected a total of Rp 48.739 trillion last fiscal year, higher than the budget's target of Rp 48.343 trillion.

Revenue from property taxes was projected to reach Rp 2.28 trillion last fiscal year, slightly higher than the Rp 2.27 trillion target.

The collection of other taxes, especially export and import taxes as well as excise, is undertaken by the Directorate General of Customs and Excise.

Excise revenue was estimated to increase 4.6 percent to Rp 4.2 trillion last fiscal year because of increases in the costs of most goods subject to excise.

But receipts from import duties were projected to fall 18.6 percent to Rp 2.8 trillion because of the government's policy of further lowering import tariffs.

Director General of Customs and Excise Soehardjo Soebardi said recently that the government's national car policy had partly been responsible for the lower revenue from import duties.

The car policy, announced in February last year, provides duty and tax breaks to PT Timor Putra National -- a company controlled by President Soeharto's youngest son Hutomo Mandala Putra -- for three years to manufacture Timor sedans, deemed as national cars, in cooperation with Kia Motors Corp. of South Korea.

Fuad, however, noted that the national car program did not affect his office's tax collection although it exempted Timor Putra's cars, imported fully assembled from South Korea since last August, from luxury sales tax.

He added that the government had taken into account the national car program when drafting the tax revenue target for the current 1997/1998 budget. (rid)