Govt defends management of non-tax revenue

JAKARTA (JP): Minister of Finance Mar'ie Muhammad yesterday defended the government's handling of non-tax revenue raised by ministries and state agencies.

Speaking at a House of Representatives' plenary session, Mar'ie acknowledged that the bill on non-tax revenue was aimed to improve the government's discipline in managing income raised from sources other than taxation.

"However, it does not mean that we have not been disciplined in implementing our budget in past years," Mar'ie told reporters after the session.

He noted that Soeharto's administration was economically successful because of its budgetary discipline.

"With this bill, we hope we can increase non-tax revenue from year to year and improve its allocation and management," Mar'ie said.

At the previous session, the United Development Party (PPP) demanded that the government provide a full account of the use of non-tax revenue since 1969.

The PPP contended that many legal levies raised by ministries and state agencies were not included in the state budget and were therefore uncountable.

The bill on non-tax revenue stipulates that all government income from non-tax sources must be accounted for in the annual state budget.

Non-tax income is derived from licensing fees, user fees, royalties as well as rents and investment income from state assets.

Mar'ie said the bill would serve as a legal basis for the government to raise non-tax revenue so that its dependence on foreign funding would continue to decrease.

"In a time full of uncertainty in the financial sector, we should raise funds to the maximum from domestic resources to finance our development. Thus, non-tax revenues will complement our domestic income from taxes and oil and gas," Mar'ie said.

The state budget for the 1997/1998 fiscal year balances at Rp 101.08 trillion (US$42.2 billion).

The government has projected that non-tax revenue would increase 12.9 percent to Rp 8.2 trillion (US$3.4 billion) in the 1997/1998 budget from Rp 7.26 trillion this fiscal year.

Tax revenue is expected to increase 15.6 percent to Rp 64.7 trillion in 1997/1998 from Rp 55.98 trillion.

The government expects its income from oil and gas to rise only 5.3 percent to Rp 14.87 trillion from Rp 14.12 trillion. And its income from sales of fuel products to fall 69 percent to Rp 249.2 billion from Rp 827.8 billion.

"If we expect an increase in our domestic income from the oil and gas sector, it is not realistic because of fluctuating oil prices.

"Similarly, it is unrealistic to expect an increase from taxes alone. So, we hope that non-tax revenue will help strengthen our domestic income," Mar'ie said.

Mar'ie acknowledged there was still room to raise tax revenue considering that the country's taxes were worth only 11.8 percent of gross domestic product.

This rate is the lowest among Southeast Asian countries.

The minister noted that the 1997/1998 budget was contractionary in the sense that the funds injected through domestic spending would be less than funds taken out in taxes and non-tax revenue: about a Rp 5.4 trillion contraction.

He noted that the 1997/1998 budget was part of the government's policy to maintain macroeconomic stability. "Thus it is expected that the budget will help contain the inflation rate and current account deficit and help boost economic growth." (rid)