Govt dismisses rumors on drastic hike in exit tax

JAKARTA (JP): Director General of Taxation Anshari Ritonga denied on Thursday rumors that the government would raise the amount of the exit tax in a bid to deter a massive exodus of people fearful of a chaotic general election in June.

"It's absolutely not true. We've never considered such a measure. I'll sue those who started the rumor," he told reporters on the sidelines of a debate of the 1999/2000 state budget draft with the House of Representatives Commission VIII on state budget and finance.

Early this week rumors started that the government was planning to raise the exit tax to Rp 4 million from the current Rp 1 million per person.

Anshari said that such a rumor might have been designed by people trying to cause the country deep trouble.

He added that the rumors could have a devastating impact on the economy if not contained.

Indonesia is scheduled to hold a general election on June 7, which is expected to be the country's first free and open election after more than 30 years under the authoritarian rule of former president Soeharto.

But bloody riots and unrest which have plagued several parts of the country since the downfall of Soeharto have raised fears that the election may lead to disorder.

The country witnessed a massive capital outflow and exodus of citizens particularly those of Chinese descent before and shortly after the fall of Soeharto in May last year.

Anshari admitted that last year's exodus boosted the government's revenue from the exit tax.

He declined to provide the figure, but said that individual income tax receipts for the current 1998/1999 fiscal year ending in March would most likely exceed the target.

Anshari told legislators that the income tax target in the 1999/2000 fiscal year could still be reached despite expected lower revenue from time deposits, which was the primary booster of income tax revenue in the current fiscal year, as interest rates had fallen to around 35 percent from more than 70 percent in September last year.

He pointed out that income tax revenue was expected primarily from the interest rates on the government bonds issued for the recapitalization of the country's ailing banks, capital gains resulting from the sale of assets owned by liquidated banks, and from agribusiness and export industries.

The government has set income tax revenue in the next fiscal year to increase to Rp 42.63 trillion, a 57 percent hike from the target in the 1998/1999 fiscal year.

Anshari also said that President B.J. Habibie's recent decision to provide a tax holiday for foreign investors entering certain industries was part of the agreement reached among Southeast Asian nations in Hanoi recently to lure foreign investors. (rei)