Legislators want greater control of state budget

JAKARTA (JP): Members of the House of Representatives attacked yesterday the proposed 1997/1998 state budget, saying that legislators should have greater control of state spending and development projects.

Legislator Muchsin from the United Development Party (PPP) faction said that House budgetary rights should be "reviewed" because they were not being exercised optimally.

"There is an impression that the 'equal partnership' between the executive and the legislative bodies has not been fully achieved," he told a House plenary session which was also attended by Minister of Finance Mar'ie Muhammad.

He said that this was apparent from the structure of the proposed budget which gave the President -- through Presidential decrees (Keppres) -- the right to determine and plan which sectors and sub-sectors were eligible for funds from the state budget and how much they would get.

Furthermore, it also allowed the government to decide how to transfer the balance of budgeted project appropriations to other programs, he added.

The state budget for the 1997/1998 fiscal year balances at Rp 101.08 trillion (US$42.8 billion) which, when adjusted for inflation, is only 5 percent larger than the current budget which will end in March.

Muchsin said that legislators could not have full control of the state budget unless they knew the details of the projects that the government was planning to implement.

He said another "peculiarity" in the proposed budget was its hierarchy of regulations. The budget, he said, put government regulations below presidential decrees.

"This contradicts our country's law on hierarchy," he said.

Similarly, House member Sri Kuntjoro of the Indonesian Democratic Party (PDI) said the government should include a detailed description of projects in the draft state budget now before the House.

"The legislature can only do its budget-controlling job if all the projects to be funded in the budget are specifically described in the budget plan.... This also helps to reduce leaks," he said.

Sri said the government's target to raise tax revenue by 11.6 percent in the draft state budget could be even more ambitious.

"As our economy continues to grow so does our tax capacity," said Sri, the PDI spokesperson.

Sri said the public's awareness of paying taxes determined the amount of revenue the state could get from them.

"Judging from the ratio between our tax revenue and gross domestic product (outside oil), it seems the compliance of our taxpayers must still improve," he said.

President Soeharto in his speech earlier this month said that the country's tax receipts for the current fiscal year were worth 11.8 percent of gross domestic product (GDP).

These are expected to increase to 12.1 percent of GDP for the 1997/1998 fiscal year.

Soeharto said this was far below the taxation levels of neighboring countries such as the Philippines with tax receipts worth 16 percent of GDP and Malaysia with 33 percent.

Soeharto said that if Indonesia's tax receipts were raised to 16 percent of GDP, like in the Philippines, the state would gain Rp 21 trillion more in revenue.

"If we increase the ratio to the level of Malaysia, we could earn about Rp 175 trillion, or more than 2.5 times the amount of our current tax revenue," the President said.

Soelaiman Biyahimo of PPP said taxation should be used by the government to control development and, if necessary, change the income and wealth structure of the private and public sectors.

Soelaiman said that from 1992 to 1995, Indonesia's tax receipts to GDP continued to fall: from 13.2 percent in 1992, to 12.4 percent in 1993, to 12.7 percent in 1994 and to 11.6 percent in 1995.

He pointed out that the government's ability to collect taxes depended greatly on the quality of services, facilities, tax regulations and the dedication and integrity of the government officials who dealt with taxpayers.

"If the public -- especially taxpayers -- are unsure whether the taxes paid to the state will be used effectively and efficiently... they will be reluctant to pay," he said.

Soelaiman said the public often witnessed government officials "siding with dishonesty and injustice".

"This will have a very negative effect on the public's tax awareness," he said.

Sri also commented yesterday on the government's non-budgetary spending which, when combined with the expenditure stipulated in the budget, could cause strong inflationary pressure.

"Therefore, we welcome the bill on non-tax revenues which was unveiled to the DPR (House) recently... This will greatly improve the government's budgetary discipline," he said.

The bill, which is now being deliberated by the House, covers all the government's income from taxes and other sources such as licensing, user fees, royalties, rents from state assets and investment income from state assets.

The PDI said the government should consider using the budget surplus from the oil and gas sector -- which was expected to reach about Rp 3.5 trillion -- for "important things" such as raising the salaries of civil servants and Armed Forces members.

"This is particularly important for the lower-income categories (of the civil servants and Armed Forces members), for whom we propose a pay hike of at least 20 percent," he said.

The draft budget includes a 16 percent increase in personnel spending to Rp 21.19 trillion. (pwn)