Govt seeking to boost tax ratio to 17-20%

Govt seeking to boost tax ratio to 17-20%

Dadan Wijaksana, The Jakarta Post, Jakarta

Vice President Hamzah Haz said on Friday the country's tax ratio
must reach between 17 percent and 20 percent to allow the state
budget to allocate greater spending for economic development.

He said that spending for development was very limited because
the state budget was heavily burdened with the cost of bailing
out ailing banks.

He said that the government was determined to boost the
current low tax ratio level of around 13 percent by expanding the
number of taxpayers.

"We need to boost the tax ratio to 17-20 percent so that we
can allocate more to accelerate economic development," Hamzah
told reporters after submitting his tax forms at the Directorate
General of Tax, but did not give a timeframe for when the target
must be reached.

A tax ratio is the ratio between a country's tax income and
its Gross Domestic Product (GDP).

The tax office expects to reach 3.5 million taxpayers in 2002,
compared to 1.9 million last year. Tax revenue this year is
expected to reach Rp 184.7 trillion. (US$18.4 billion)

By 2004, the government wants to see the number of taxpayers
rise to 9 million.

Indonesia's tax ratio is among the lowest in Asia.

Economists have said that raising the tax ratio target is
commendable but they warned that the government should avoid
increasing the tax rate amid the current economic difficulties.

They also warned that boosting the number of taxpayers would
create massive paper work that could lead to a serious problem as
the tax office lacks sufficient professional staff.

Boosting incomes from tax payments has been high on the
government's mind as it seems to have run out of sources to
finance the state budget.

With huge expenditures continuing to put pressure on the
budget, the government is desperate to rake in as much as it can
get from the revenue side.

Meanwhile, Director General of Tax Hadi Purnomo said Friday
that, as of March 15, his office had collected tax revenue
amounting to Rp 30 trillion.

That amount is some 17 percent higher than the same time last
year.

For this year, the state budget hopes to raise a total of Rp
184.7 trillion in tax revenue, of which Rp 88.8 trillion is
expected to come from non-oil and gas income tax revenue.

As for last year, Hadi's office managed to slightly exceed the
target of Rp 156.6 trillion after posting a tax collection of Rp
158.3 trillion.