Govt to step up taxation efforts

Govt to step up taxation efforts

JAKARTA (JP): The government will intensify taxation efforts
and reduce new foreign borrowing and investment spending to
control the budget deficit for the 2000 fiscal year at a maximum
of 5 percent of the gross domestic product, finance minister
Bambang Sudibyo said on Friday.

"We will go all out to broaden the tax base or increase the
tax coverage through tax and excise-duty reform," Bambang said
after a plenary Cabinet session which finalized preparations for
the 2000 draft budget.

Unlike the current budget which runs from April to March, the
coming budget will cover only nine months until December as the
government will adjust the fiscal year to the calendar year
starting in January 2001.

"But, please, don't ask us to give any figures because we
can't until the draft budget is unveiled to the House of
Representatives on Jan. 20," added Bambang.

He was accompanied by Coordinating Minister for the Economy,
Finance and Industry Kwik Kian Gie and chief of the National
Development Planning Board Djunaedi Hadisumarto at the news
conference.

Kwik earlier said the budget would be made more transparent,
easier to understand and more straightforward in its definitions.

"For example, foreign loans will be entered as foreign
borrowings and not development revenues as in the past budget
documents," Kwik added.

Kwik said details in the budget would be more transparent
regarding the deficit and how it would be financed.

Bambang added the 2001 budget would be made more transparent
to enable the House to assess individual spending items in
detail.

Over the past 30 years, the budget document outlined spending
only by sector and subsector, thereby making it extremely
difficult to ascertain how taxpayers' money was used.

The finance minister said the budget deficit would be
decreased gradually so the budget would at least be balanced in
the medium term.

He added that asset sales by the Indonesian Bank Restructuring
Agency and privatization of state enterprises would play a
crucial role in controlling the deficit and enabling the
government to gradually cut down new foreign borrowing.

Another outstanding feature of the coming budget will be the
greater appropriation to regional administrations in preparation
for the implementation of the laws on regional government and
intergovernmental fiscal relations beginning in January 2001,
Bambang added.

Djunaedi said budget appropriations for investment (defined as
development budget) would be reduced.

"The small investment budget will focus on the maintenance of
basic infrastructure and public facilities to improve their
efficiency."

He added that his agency would no longer be involved in
preparing projects or programs for public investment.

"My agency will only outline investment spending by subsector
and major program. Technical details such as project and program
activities will be programed by regional administrations in
cooperation with the provincial offices of technical ministries."

Bambang did not disclose substantive details of plans to phase
out price subsidies for fuel, electricity and other basic needs.

He only repeated that subsidies would gradually be cut down
and would be better targeted to those in need.

But he reiterated the importance of a substantial pay rise for
senior state and government officials to match the market rate.

The pay level of lower rung civil servants has by and large
matched the market rate, Bambang said, but top officials'
salaries were below the standard of the private sector.

He used his own salary as an example.

"It is quite strange that my official pay is much lower than
that of the head of the Indonesian Bank Restructuring Agency,
while it is the finance minister who recommends who will be
appointed by the President to lead the agency. This is an anomaly
that has to be corrected gradually."

Bambang argued that meritocracy was one element of democracy
and should be reflected in the pay structure of an
organization.

The government has planned to drastically raise the pays of
top officials, including the president, vice president and
Cabinet ministers, and those of civil servants and military and
police members by 20 percent, beginning in April.

The proposed pay increases will be included in the 2000 draft
budget which will be submitted to the House next week. (prb/vin)