Income tax yield nearly doubles initial target

JAKARTA (JP): State revenue from income tax in the 1998/1999 fiscal year ending in March is expected to reach Rp 49.71 trillion (about US$5.8 billion), double the initial target of Rp 25.85 trillion.

Minister of Finance Bambang Subianto attributed the increase in tax revenue to high interest rates on time deposits and the healthy performance of the mining and agribusiness sectors.

"The higher than expected income tax receipts were partly due to the high income tax payments from agribusiness and mining companies, which mostly reported a windfall profit during the fiscal year," the minister told the House of Representatives at a plenary session to approve revisions of the 1998/1999 state budget.

Interest rates have hovered around 35 percent and 45 percent per annum as the monetary authority tightened currency supply to prevent a further fall in the rupiah.

The government did not provide data on the tax revenue from exports. But value added tax revenue declined slightly from Rp 28.94 trillion to Rp 28.4 trillion.

The total state budget revenue was expected to reach Rp 215.13 trillion, about 81.5 percent of the target due to lower receipts from oil and gas exports. The total spending could be squeezed to Rp 215.59 trillion, or about 81.6 percent of the initial estimate, but the budget would still suffer an estimated deficit of Rp 456.7 billion.

State income and spending were initially set at Rp 263.89 trillion.

Bambang said the declining trend in oil prices and improving exchange rate of the rupiah against the dollar had affected the oil revenue target.

On the spending side, the strengthening of the rupiah, the restructuring of government debt, and the lifting of government subsidies on certain commodities since September had sliced routine spending by some 14 percent, he said.

The rupiah fluctuated between Rp 7,000 and Rp 9,000 against the dollar in the second semester of the fiscal year. The government's revenue projection was initially based on the assumption that the rupiah would stand at Rp 10,600 to the dollar. (rei)