Govt expects up to Rp 6 trillion in tax surplus

JAKARTA (JP): Despite a shortfall in income tax revenue, the government expressed confidence total tax receipts would exceed the initial target by up to Rp 6 trillion (about US$659 million).

The director general of taxation, Machfud Sidik, said that as of Nov. 7, total tax receipts reached Rp 74 trillion, or 84 percent of the initial targeted Rp 85.2 trillion for the fiscal year that will end in December.

"Although, there is a deficit in income tax revenue of Rp 5 trillion, the net surplus in total tax receipts will reach Rp 6 trillion," he said.

He said there would be a surge in the tax payments in December, as many people preferred to pay their taxes just before the close of the year.

This fiscal year runs only nine months, from April to December, because the government is adjusting to a calender-based fiscal year.

"This is why for the remaining one month and three weeks, I estimate additional income of around Rp 17 trillion," he said.

By the end of this year, he said, total tax revenue might reach Rp 91 trillion.

Machfud attributed the surplus to increased oil and gas taxes as a result of higher crude oil prices.

The forecasts for 2000 state revenue from oil were based on oil prices of $20 per barrel, while the average oil price so far this year has been well above $28 per barrel.

However, Machfud added that income tax revenue might fall to between Rp 39 trillion and Rp 40 trillion from the initial target of Rp 44.1 trillion.

"The shortfall is mainly caused by a drop in income tax on bank deposits," he explained.

From the targeted Rp 11.5 trillion in income tax on time deposits, he said the government thus far had realized only Rp 4.5 trillion.

"It's tough. We're probably not going to make it," he said.

Analysts have said that unattractive time deposit rates have prompted people to withdraw their savings, thus cutting the government's income tax gains.

However, this year's strong consumer spending could push up the value added tax (VAT) gains, he said, forecasting that VAT receipts might record a surplus of about Rp 4 trillion this year.

From property taxes, the surplus is estimated to reached about Rp 1 trillion, and income tax from the oil and gas sector is expected to book a surplus of between Rp 5 trillion and Rp 6 trillion, he said.

Machfud also suggested the government tax Bank Indonesia. He said the central bank could contribute about Rp 900 billion in corporate income taxes alone.

"This isn't about the amount (of taxes), but that everyone should be treated the same under the tax law," he explained.

He said non-profit organizations were subject to taxation, so a business entity like Bank Indonesia should therefore pay taxes. "This is where the fairness lies."

Machfud said earlier the country was too dependent on corporate tax income, and needed to build a stronger base of individual income tax payers.

According to him, out of approximately 20 million potential private taxpayers, only 1.3 million were registered with his office.

The government announced last week it was planning to crack down on companies, institutions and individuals suspected of tax crimes.

It said it found preliminary evidence of tax crimes by 100 institutions and 50 wealthy individuals.

Machfud, however, did not explain how this crackdown was progressing. (bkm)