Govt to get tough on taxpayers to offset losses
Govt to get tough on taxpayers to offset losses
Rendi A. Witular, Jakarta
The government will get tougher on taxpayers to achieve next
year's revenue target and to offset potential losses from the
implementation of new taxation laws, a tax official said.
The 2005 draft budget projects revenues from taxes, including
excise and import duties, to increase by only 9.3 percent, or Rp
25.3 trillion (US$2.81 billion), to Rp 297.5 trillion from Rp
272.2 trillion last year.
The target is moderate, considering that tax revenues have
increased by an average 14.2 percent per annum over the past
three years.
"Initially, we planned to increase tax revenues for next year
by between 25 percent and 30 percent.
"However, we cut the target to only 9.3 percent to take into
account potential losses caused by the implementation of new
taxation laws," Wahyu Santoso, the Directorate General of
Taxation's former head of tax potential, who was involved in
drafting the 2005 state budget, told The Jakarta Post over the
weekend.
Despite being moderate, the target will not be easy to achieve
unless the government boosts enforcement, said Wahyu, who is now
a senior official at the Central Jakarta tax office.
Law enforcement efforts would include detaining recalcitrant
taxpayers, confiscating or freezing their assets and prosecuting
them at court, he said.
Other solutions to achieve the target revenue are to expand
the number of new taxpayers by simplifying administration
processes, screening new taxpayers and encouraging people to
obtain their registered tax numbers.
With such a program, the directorate expects the number of
taxpayers -- individual and corporate -- to reach about 10
million by the end of 2005, from 2 million presently.
The directorate, which is under the auspices of the Ministry
of Finance, has drafted amendments to three tax laws: Law No.
16/2000 on general taxation arrangements and procedures, Law No.
17/2000 on income tax and Law No. 18/2000 on luxury sales tax and
value-added tax on goods and services.
The outcome of the draft laws, which have been arranged by the
government since late last year, remains uncertain, as President
Megawati Soekarnoputri has thus far refused to approve them for
deliberation by the House of Representatives.
According to the 2005 draft budget, potential losses from the
enactment of the new laws will ensue primarily from the reduction
of income tax for corporations and institutions to a flat rate of
28 percent, from the current maximum rate of 32 percent.
Other losses may result from the income tax adjustments for
individuals, which will exempt people of a particular economic
bracket from income tax.
Meanwhile, economist Chatib Basri said efforts to widen the
taxpayer base would be more crucial in reducing potential losses
from new tax laws.
He said detaining taxpayers could create worries in the
business community, as they might fear tax officials would misuse
their authority to extort taxpayers.
Ibox
Tax revenues (in Rp/trillions)
2004 budget 2005 draft budget
Domestic Taxes 260.2 285.1
I. Income tax 133.9 141.8
a. Oil & gas 13.1 13.5
b. Non-oil & gas 120.8 128.2
II. Value-added tax 86.2 98.8
III. Property tax 8.0 10.2
IV. Property transfer duty 2.6 3.2
V. Excise 27.6 28.9
VI. Others 1.6 2.0
International trade tax 11.9 12.3
I. Import duty 11.6 12.0
II. Export tax 0.31 0.34
Total 272.2 297.5
Source: Ministry of Finance