Government not to rush to meet tax target

Government not to rush to meet tax target

JAKARTA (JP): Tax Director General Fuad Bawazier made it clear
yesterday that the government will not be over-zealous in
fulfilling its high target of tax revenues in the next fiscal
year.

"There will not be a rate increase or any other drastic
measures in meeting the high projection in the tax revenues," he
told around 70 business executives at a seminar on taxation.

The government's non-oil revenues, mostly comprising of taxes,
in the 1996/1997 fiscal year are projected to increase by 20.9
percent to Rp 64.08 trillion (US$29.10 billion). The non-oil
revenues will account for around 82 percent of the total domestic
revenues of Rp 78.2 trillion. Besides the domestic revenues, the
government also expects to obtain foreign aid of Rp 12.41
trillion.

The rate of next fiscal year's non-oil revenue increase is far
higher than the 13 percent rise this fiscal year.

Increase

Next fiscal year's income tax revenues of Rp 23.7 trillion
indicate an increase of 23.2 percent, far higher than this fiscal
year's increase of 2.1 percent. The revenues from the value-added
tax are projected to increase by 30.8 percent to Rp 21.78
trillion, as compared to the 25.8 percent in the current budget.

Except for import duties, which are expected to decline by 2.6
percent, the revenue target from other taxes, including those on
exports, land and building, is also much higher than that in the
present budget.

Fuad said that achieving the high target in the tax revenues
is possible through the expansion of the coverage of income,
property and value added taxes.

Registering new tax payers will be the main priority in
meeting the high target, in addition to the intensifying efforts
to catch those withholding taxes, he explained.

Fuad acknowledged that at present many rich people, who own
good cars and big houses, are still able to avoid income tax due
to the lack of control from tax officers.

Additionally, many people in the country are also still able
to avoid paying VAT when making business transactions, he said.

"We will, therefore, further improve controls in the coming
years so that tax avoidance will be minimized," he said.

The people should, therefore, not panic when analyzing the
government's high tax revenue target because the government will
not in any way raise the tax rates or take over-zealous action in
meeting the target, according to Fuad.

The income tax rates, according to the new tax laws, are 10
percent for annual incomes of up to Rp 25 million, 15 percent for
incomes from Rp 25 million to Rp 50 million and 30 percent for
those over Rp 50 million.

The tax laws stipulate a possible reduction in the top rate to
25 percent.

Fuad said that the government will abide by the tax laws even
though there is a sharp increase in the revenue target for the
next fiscal year. (hen)