House calls for revision of wording in tax bills

House calls for revision of wording in tax bills

JAKARTA (JP): The House of Representatives (DPR) called for
the revision of four government-proposed tax bills yesterday,
saying that they still contain many loopholes.

Spokesmen from the four House factions -- Armed Forces,
Golongan Karya, the United Development Party (PPP) and the
Indonesian Democratic Party (PDI) -- said the wording of a number
of articles in the bills needed changing as they only contain
general aspects of the tax collection system.

The four factions said that the articles dealing with special
tax incentives for investors doing business in remote areas or
other privileged economic zones are still too ambiguous.

"These loose articles are still open to abuse by both the
government and the taxpayers," a spokesman of the Moslem-
dominated PPP faction said.

Speaking during the first day of the tax bill deliberation,
the small PDI faction also questioned the fairness of the
government's proposed income tax rates.

"We want a clear answer from the government as to whether the
new tax tariffs really improve impartiality," said the spokesman
of the PDI faction.

The faction earlier called on the government to introduce two
different tariffs, one for individuals and another for
corporations. It said that the income tax rates for individuals
should be lower than those for corporations. PDI also called for
the introduction of more than four income brackets to improve the
fairness of the tax system.

Responds

Responding to the requests, Minister of Finance Mar'ie
Muhammad said he shared the concern of the House members but said
that it was impossible to state "all things" in all the rulings
stipulated in the tax bills.

"In certain cases, the ruling should be flexible as they have
to be adjusted to changing economic situations," the minister
said in his response to House members' comments.

Mar'ie said that changing the wording of the articles, which
the House members criticized for being too ambiguous and too
loose, is still possible as long as the revisions would not
create difficulties in their implementation.

The four tax bills will amend existing tax provisions and
procedures, the income tax and value added tax (VAT) as well as
the land and building (property) tax.

The government proposes a reduction in the income tax rates to
between 10 and 30 percent from 15 and 35 percent at present. The
proposed rate for the lowest income bracket of up to Rp 25
million (US$11,500) per annum is set at 10 percent. The tariff
for the income bracket of between Rp 25 million and Rp 50 billion
is 15 percent, for the income bracket of between Rp 50 million
and Rp 75 million 20 percent and for the income bracket of above
Rp 75 million 30 percent.

Under the present tax laws, the rate of the income tax for the
lowest income bracket of up to 10 million is 15 percent, for the
income bracket of between Rp 10 million and Rp 50 billion 25
percent and for that above Rp 50 million is 35 percent.

The income tax bill also seeks an increase in the amount of
untaxable individual income to Rp 1.72 million ($822) from Rp
960,000 at present. The additional tax exemption for married
taxpayers rose to Rp 864,000 from Rp 480,000, while the
additional deduction for a wife will increase to Rp 1.72 million
as compared to Rp 960,000 at present and the deduction for a
child will be raised to Rp 960,000 from Rp 480,000.

The House set up a special team last week to deliberate over
the four tax bills proposed by the government early last month.
The 81-member team, chaired by Novian Kaman of the Golongan Karya
faction, must complete the deliberation before the approval date
of Oct.12, less than two weeks.

The House's two other teams are also currently working to
ratify a bill on the World Trade Organization (WTO) and a bill on
limited companies. The House is expected to endorse the two bills
next month. (hen)