House asks govt to raise tax revenue target for 2003

Dadan Wijaksana, The Jakarta Post, Jakarta

The House of Representatives is urging the government to revise some of the expenditure and revenue figures in the draft 2003 state budget to make it more responsive to current global economic developments and the real needs of the economy.

"Everything (from the budget) needs some adjustment in both state revenues and expenditures," chairman of the House budget commission Abdullah Zainie told reporters after a budget deliberation with the finance ministry's director general for state budget Anshari Ritonga on Tuesday.

On the revenue side, Zainie said that the proposed tax revenue target for 2003 could still be increased to help the budget in financing the economic development program.

As stated in the state budget draft, presented by the government last month before legislators, tax income for 2003 was targeted to stand at Rp 260.8 trillion (US$29.2 billion), or 13.3 percent of gross domestic product.

Zainie said that the tax ratio could still be raised to 3.5 percent.

This should come as a surprise amid concern from businessmen stating that the target proposed earlier by the government would hurt businesses due to current economic difficulties and shrinking export markets overseas.

In comparison, the tax target for this year has been set at Rp 219.6 trillion, which accounts for some 13 percent of GDP.

Zainie also asked the government to allocate more funds to the development program, which was set at Rp 54.5 trillion under the proposed budget.

He said that such a meager amount would be insufficient to generate economic activities to push economic growth.

In percentage terms, the amount was less than the target for this year. The targeted spending for development for 2003 accounts for only 2.8 percent of GDP, compared with 3.1 percent this year.

According to Zainie, the government should also take into consideration the latest developments worldwide in determining assumptions for the oil price, which for 2003 has been set at $20.50 per barrel.

"Under the current circumstances, it's possible for the price to rise to $22 per barrel," he added.

He was referring to the increasing political tension in the Middle East, triggered by threats from the U.S. to launch an attack on Iraq, which has sent the international oil price to about $29 per dollar.

The House and the government will continue their deliberations next week.