Govt expects higher non-tax income

Dadan Wijaksana, The Jakarta Post, Jakarta

The government expects this year's non-tax revenue to increase by more than 60 percent from the original allocation in the 2004 state budget, due mostly to the soaring oil prices.

As stated in the revised 2004 state budget, agreed jointly by the government and House of Representatives Budget Committee last week, the non-tax revenue has now been earmarked at around Rp 122 trillion (US$13.35 billion), or 60.6 percent higher than the initial target of Rp 77.1 trillion.

The largest contribution to the extra proceeds was expected to come from the natural resources revenue -- mostly oil and natural gas, which was targeted to generate some Rp 92.4 trillion, almost twice the initial target of Rp 47.2 trillion.

The government decided to revise the state budget chiefly because of significant changes in the oil price. The original state budget assumed an average of $22 per barrel for the year. But with soaring oil prices, the government now assumes a much higher oil price average of $36 per barrel this year.

Last week, world oil prices were closed steady after hitting record highs in London the day before. The benchmark Brent North Sea crude oil dipped 13 U.S. cents to $45 a barrel, a day after reaching a new record of $45.75.

While the high-flying oil prices is causing a headache for the government as it inflates fuel subsidy cost, the increased revenues it obtains as an oil-and-gas exporting country serves as a "positive side" of the current oil market volatility.

Although in the end, the government will still have to split the income with regions as part of a mandated revenue-sharing mechanism.

On income from forestry, it has also been raised by 167 percent to Rp 2.7 trillion from Rp 1.7 trillion.

However, on fishery, the income target was reduced by 50 percent from Rp 600 billion to Rp 300 billion.

Revision to 2004 State Budget

Non-tax revenue Rp123.8 t

1. Natural Resources Rp 92.4 t

2. Profit transfer from SOEs Rp 9.1 t

3. Others Rp 22.3 t

Source: The House Budget Committee

SOEs: state-owned enterprises