House to ask government to raise 2000 tax revenue target
House to ask government to raise 2000 tax revenue target
JAKARTA (JP): House of Representatives Commission IX for the
state budget and banking wants the government to revise upward
its tax revenue target for the 2000 budget.
The head of Commission IX, Sukowalujo Mintohardjo, said on
Monday there was still room to increase the tax revenue target
because the country's current tax to gross domestic product (GDP)
ratio was still low compared to neighboring countries.
He also said that past experience showed that the government
tended to always surpass its tax revenue target.
"We will ask the government to raise its tax revenue target in
2000," Sukowalujo told reporters following the commission's first
internal meeting on the April-December 2000 state draft budget
proposed by President Abdurrahman Wahid's administration last
week.
He said the legislators did not specifically by how much the
tax revenue should be revised.
Under the draft budget, the government has set its tax revenue
target at Rp 97.78 trillion or around 10.6 percent of GDP -- as
compared to 17 percent in Thailand, 37 percent in Malaysia, 21
percent in Singapore, 19 percent in Brunei and 16 percent in the
Philippines.
The House is scheduled to approve the state budget proposal on
Feb. 29 after it has been debated with the government.
Several economists and businesspeople have said it would be
difficult for the government to achieve its tax revenue target
this year because of the still weak economy.
But Sukowalujo believes the government can push itself to the
upper limit to obtain a greater tax revenue.
"There are still loopholes ... there are still people (and
companies) who can get away without paying taxes," he pointed
out.
Sukowalujo also said that from now on, the main source of
financing of the state budget should come from taxes.
He said the House would ask the government to immediately
design a law on taxing private wealth to allow the government to
widen its source of tax in the future.
He said that under the current tax regime only land and
buildings were defined as wealth.
"There are other forms of wealth that must be treated as
taxable objects," he said.
The government is currently designing a new law on tax as part
of efforts to reform the country's tax sector. The government is
scheduled to submit the new law next month to the House.
Newly appointed director general of taxation Mahfudh Sidik
said last week that his office was considering raising the
personal income tax level up to 35 percent as part of the tax
reforms.
The current personal income tax level ranges from 10 percent
to 30 percent and also applies to corporate income tax.
He said that under the tax reform plans, the income tax of
companies would be set at a flat rate of 25 percent.
The government has reclassified corporate and personal
taxpayers into four groups according to size to improve taxation
auditing and targeting large taxpayers.
Mahfudh said that obtaining the tax revenue target in the 2000
budget would be a tough job. He said it could only be achieved if
the economy continued to recover.
In a bid to improve tax revenue, the government under its
agreement with the International Monetary Fund, will abolish tax
holidays it promised to grant certain new investment projects and
replace those facilities with an investment tax allowance.
The government is also likely to abolish tax free zones, like
those in Batam, Rempang and Galang islands in Riau.
The government will also abolish certain tax break facilities,
and value-added tax exemptions, like those on capital goods.
(rei)