Govt confident in achieving tax revenue target

JAKARTA (JP): Minister of Finance Mar'ie Muhammad reassured yesterday that the government's domestic revenue from taxes would reach its target despite the monetary crisis and subsequent economic downturn.

Speaking at a hearing with the House of Representatives Commission VIII for state budget and finance, Mar'ie said revenue from income taxes would achieve its target but not revenue from value-added taxes (VAT).

"Although the current economic condition is not as good as last year, the government is trying to reach its domestic revenue target from taxes," Mar'ie said.

"Nevertheless, revenue from VAT would be about the same as the target or slightly lower," Mar'ie said in a written answer to the commission's written questions.

Tax revenue for the first half of the fiscal year was Rp 25.04 trillion (US$7.36 billion), or about 38.7 percent of this year's target of Rp 64.71 trillion.

Of total tax revenue, VAT revenue was Rp 8.93 trillion, or 36.3 percent of its target of Rp 24.6 trillion.

Mar'ie said during the first half, the government waived VAT taxes totaling Rp 127.9 billion, excluding waivers granted to the "national" car imported from South Korea or imported capital goods.

The decline in VAT revenue will be offset by revenue from income taxes as well as property and building taxes.

For the first half of the fiscal year, the government collected Rp 11.56 trillion from income taxes, or 39.7 percent of its target.

Mar'ie said income taxes from companies having debt denominated in U.S. dollars would decline as their profits would drop.

"Nevertheless, in the last three months (Oct., Nov. and Dec.) we will see an increase in revenue, especially from the tax on founding shareholders, tax from the sale of property and buildings and from import duties," Mar'ie said.

Revenue from property and building taxes was Rp 856.7 billion for the first half, or 34.2 percent of this year's target.

Mar'ie projected that revenue from property and building taxes for the fiscal year would exceed its target because such taxes, especially from mining, rural and urban sectors, were usually paid in October, November, December and March.

"As an illustration, in October alone we received Rp 567.3 billion from property and building taxes," Mar'ie said.

Revenue from import duties stood at Rp 1.39 trillion in the first half, or 41 percent of this year's target.

Mar'ie said revenue from import duties would increase as a result of the rupiah's depreciation, which forced importers to pay more of their duties in rupiah.

The current state budget is Rp 101.08 trillion.

The government has targeted Rp 15.02 trillion in revenue from the oil and gas sector, including proceeds from the sale of petroleum products, Rp 64.71 trillion from various taxes, 8.22 trillion from nontax revenue and Rp 13.02 trillion from offshore loans.

Mar'ie said revenue from oil and gas would achieve its target, except that from the sale of petroleum products.

The government has projected it will rake in Rp 249.2 billion in proceeds from the sale of petroleum products. But during the first half of the fiscal year, the government did not record any revenue from the sale of the products.

"And for the second half of this fiscal year, we will likely subsidize the sale of petroleum products due to the sharp depreciation of the rupiah against the U.S. dollar and the relatively high price of crude oil," Mar'ie said.

Besides fuel products, the government has also allocated a significant amount of funds for other subsidies, including for fertilizer production and distribution and for some state firms and agencies.

The government has earmarked Rp 31.5 billion in subsidies for state-owned railway firm Perumka for infrastructure maintenance.

The government has also provided Rp 5.5 trillion in subsidized liquidity credit, as of August, to the National Logistics Agency (Bulog), Rp 3.7 trillion to plantation firms and Rp 1.5 trillion to cooperatives. (rid)