House factions criticize govt 2003 tax target

Dadan Wijaksana, The Jakarta Post, Jakarta

Major factions in the House of Representatives criticized the government-proposed tax collection target for next year, which sees a hefty increase compared to this year's, saying it would harm people's sense of justice.

The National Awakening Party (PKB) said that the draft did not reflect the right balance as most of the tax revenue would only be allocated for servicing the country's huge debts.

"This means that only a small amount of tax revenue would be used to eradicate poverty and to improve people's welfare," PKB spokesman Anshor Cholil told a plenary session on Thursday in his party's official view over the proposed 2003 state budget, unveiled by President Megawati Soekarnoputri last week.

Also present at the session, which saw ten factions reveal their view on the draft budget, was Minister of Finance Boediono.

Thursday's session forms the first phase of the deliberation on the draft budget while the next stage is expected to take place on Aug. 29, with the government -- through Boediono -- replying to the views of the factions.

Last week, the government proposed a higher tax revenue target of Rp 260.8 trillion (about US$29 billion), compared to the projected Rp 219.6 trillion this year.

From the government's point of view, such a rise is necessary to help finance the budget, which is heavily burdened by a huge public debt. For next year, some Rp 80.9 trillion will be allocated to service the debts.

However, according to the PKB, the party of former president Abdurrahman Wahid and the third largest in the country, this is exactly where the injustice lies.

The higher the gain the government can make through taxes, the higher the allocation should be to be returned to the public in the form of development programs, the party said.

Megawati's party, the Indonesian Democratic Party of Struggle (PDI Perjuangan), which is the largest in the House, also centered its criticism on the higher tax revenue target.

Party spokesman Soewignyo said that since the tax system in the country was unfair as it focused more on the average person while giving leeway to large taxpayers to evade tax payments, there should be no reason for the government to squeeze more taxes out of people.

PDI Perjuangan also criticized the rampant corruption in the tax office, and urged the government to address this problem so that leakages could be minimized.

Other parties were also concerned about the corruption problem.

Although there is no actual evidence, corruption practices between taxpayers and tax officials are rife and have become a public secret.

The United Development Party (PPP) said that income from taxes had never been optimum all these years primarily due to the plenitude of leakages in the process.

Joining the critics was Rizal Djalil, the outspoken legislator of the Reform Party, stating that the hefty rise in the tax revenue target should have been translated into higher stimulus for economic activities.

Despite raising the tax income target by more than Rp 40 trillion, allocation for development spending next year is considered moderate, and has only increased by about Rp 2 trillion to Rp 54.5 trillion.

Higher development spending would have been crucial to finance the production sectors, which would accelerate economic activities, thereby generating higher growth needed to absorb unemployment.

Rizal also raised concerns that the target would prove a deterrent to the business circle. "The increase in the tax revenue target is definitely needed to ensure fiscal sustainability. But it could also suppress the appetite of the business community to make new investments."