Govt will resort to 'force' in collecting taxes

Govt will resort to 'force' in collecting taxes

JAKARTA (JP): Minister of Finance Bambang Subianto said
yesterday the government would use "force" to ensure that tax
revenue met the target in the current 1998/99 fiscal year.

Speaking during deliberation of the newly revised state budget
with Commission VIII of the House of Representatives (DPR), the
minister said the action might include issuing distress warrants.

Use of the warrant -- allowing for the seizure of goods of
delinquent taxpayers to satisfy tax claims -- was first
introduced in 1959 but never enforced. But the government's
revision of the tax law last year specifically reasserts the use
of the warrant in tax collection.

Although Bambang did not explain the mechanism for use of the
distress warrant, analysts said use of a warrant was common in
developed nations.

The harsh action was needed in order to meet the 1998/1999 tax
revenue target amid hardships faced by the business sector in the
wake of the year-long economic crisis, he said in answering
questions from the commission which oversees matters concerning
the State Budget, finance and research and technology.

The minister and legislators started yesterday a three-day
hearing on the revised 1998/1999 state budget.

The government announced Thursday the second revision of the
budget to accommodate a further deterioration in the economy and
a huge subsidy commitment to help the poor in surviving the
country's worst economic crisis in three decades.

The tax revenue target was revised upward to Rp 72.90 trillion
from Rp 66 trillion set earlier under the January budget version.

"The tax collection will be intensified in business sectors
which are expected to have good prospects despite the current
monetary crisis," Bambang said.

He said these included exporters, companies which utilized
domestic raw materials and firms operating under a foreign
payment system.

Particular attention will be paid to the foreign exchange
business and bank time deposits which had enjoyed high interest
rates, he added.

Bambang said the government would also expand tax coverage to
secure the revenue target.

He explained that new tax sources would primarily come from
the discontinuation of value-added tax and import tax privileges
for electricity power producers, taxi-cab importers, animal-feed
producers and the Timor national car manufacturer.

Timor is the controversial car project controlled by former
president Soeharto's son Hutomo Mandala Putra.

Bambang said most taxpayers, including exporters, had complied
with their obligations despite the crisis.

Income tax revenue during the first quarter of the fiscal year
had already reached almost half of the 1998/1999 target, he
added.

This was broken down into income tax on imports (Rp 637.9
billion collected from a target of Rp 1.72 trillion); wages and
salaries (Rp 2.25 trillion of Rp 5.29 trillion); interest,
dividends, rent and compensation (Rp 2.73 trillion of Rp 5.52
trillion) and time deposits (Rp 2.40 trillion from Rp 4.56
trillion).

He added there were several companies which suffered liquidity
problems due to the sharp depreciation of the rupiah and the high
interest rate environment which requested a postponement in
paying their taxes.

Director General of Taxation Effendi Ritonga was optimistic
the tax revenue target could be obtained through the
intensification and extensification of means.

"The target for the first quarter has been reached," he said,
adding the government had collected more than 27 percent of the
Rp 92.90 trillion target.

The total budget for 1998/1999 has been expanded to Rp 227.1
trillion, a 88.2 percent increase from the January's Rp 142.7
trillion.

The bulk of the budget is aimed at financing the social safety
net program to help the poor in surviving the crisis and debt
repayment.

Financing for the huge subsidies will largely come from
foreign aid.

Bambang said most of the subsidies would be earmarked for fuel
and basic food provision.

He said the fuel subsidy would total Rp 27.53 trillion, the
subsidy for basic foods Rp 15.71 trillion, electricity Rp 8.47
trillion, credit to small businesses Rp 4.09 trillion,
fertilizers Rp 2.13 trillion and medicines Rp 882 billion.

Revenue from oil and gas is expected to reach Rp 49.71
trillion on the assumption that international oil prices would
average US$13 per barrel.

Bambang said oil exports in 1998/1999 were projected at 554.8
million barrels, liquefied natural gas at 1.46 billion British
Thermal units, and liquefied petroleum gas at 1.96 billion metric
tons. (rei)