Government raises tax, excise revenue target

Government raises tax, excise revenue target

Dadan Wijaksana, Jakarta

The House of Representatives' State Budget Commission has
approved a government proposal to increase the tax and excise
revenue target for next year, according to officials.

Director General of Taxation Hadi Purnomo said on Monday the
commission had agreed to raise the revenue target for his office
from Rp 209 trillion this year to Rp 232 trillion (US$25.05
billion) in 2005.

However, this target only covers revenue directly collected by
the tax office, thus excluding revenue from oil and gas income
and from the customs and excise office, Hadi said.

The tax office and the customs and excise office are two
separate units under the current state revenue collection system,
but both serve under the finance ministry.

To meet the revenue target, Hadi said his office would
intensify collection from new taxpayers, although he did not go
into detail.

As of the third week of May, the tax office had collected Rp
78 trillion, or some 33 percent of the full-year target of Rp 209
trillion.

Meanwhile, Director General of Customs and Excise Eddy
Abdurrachman said that the revenue target for his office had been
increased to Rp 40.9 trillion in 2005 from this year's target of
Rp 39.2 trillion.

"The number comes from the Rp 28.9 trillion excise target plus
Rp 12 trillion from import duties," Eddy said. These figures
reflect a rise from this year's targets of Rp 27.6 trillion and
Rp 11.6 trillion respectively.

Despite the target hike, Eddy said the government had yet to
decide whether to raise excise rates on cigarettes and alcoholic
beverages in 2005.

While saying the final decision would be made by the minister
of finance, Eddy claimed the absence of such a hike this year had
increased excise revenue.

"My calculations for this year show that excise income could
reach more than the target of Rp 27.6 trillion, maybe to around
Rp 27.8 trillion," he said.

Before this year, the government had raised the excise tax on
cigarettes five times since 1999. For example, the price of
machine-made clove cigarettes is now three times higher than in
1999.

Some 90 percent of the government's excise revenue comes from
cigarettes, with the liquor industry accounting for the
remainder.