Government plans to raise taxes paid by affluent

JAKARTA (JP): The government plans to raise income tax rates for large individual taxpayers in a bid to increase state revenues from the tax sector, a senior tax official said on Tuesday.

Anshari Ritonga, the director general of tax at the Ministry of Finance, said the existing tax bracket, which sets income tax rates between 10 percent to 30 percent for individual taxpayers, only benefited the rich.

"The change will be part of the planned amendment of the Law on Income Tax," he told a business luncheon organized by the Association of Indonesian Accountants.

According to the existing law, the income tax rate for individuals with an annual income of less than Rp 25 million (US$3,400) is 10 percent. The income tax rate for people with an annual income between Rp 25 million and Rp 50 million is 15 percent, while those with an annual income of over Rp 50 million is 30 percent.

Ritonga said that the amendment was needed so that the new law would stipulate a higher tax bracket with rates ranging from 10 percent and 40 percent.

He declined, however, to elaborate about the planned change, saying that new rate should be approved by the House of Representatives (DPR).

Ritonga also said the government was committed to continuing its efforts to eliminate tax waiver facilities that reduced the tax base significantly, but the benefits of which were not felt by the country's economy.

"Some of those tax waivers are not beyond the existing law, but they breach the principle of justice," he said.

He said a team preparing the comprehensive revision of unfair tax laws was now working on it and would report the results next year. (udi)