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)