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)