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.