Mar'ie says govt unlikely to reach revenue target

JAKARTA (JP): The minister of finance, Mar'ie Muhammad, said yesterday the government was unlikely to reach its tax revenue target for the 1996/1997 fiscal year which ends this month.

Speaking at a plenary session with members of the House of Representatives yesterday, Mar'ie said tax revenue was expected to be slightly lower than planned.

"We have given a lower estimate for tax revenue because it is unlikely that several indirect tax collections will reach their target for this fiscal year," he said.

Mar'ie said this was because of the "many policies designed to increase economic activity and anticipate various international trade agreements".

"This, in turn, has caused a decline in receipts from value- added tax, sales tax on luxury goods and import duties," he said.

Direct taxes, like income tax, are imposed on individuals or businesses and usually increase with higher income or net worth.

Indirect tax is the same for each taxpayer, irrespective of income or wealth. This includes value-added tax, property tax, import duties, excise, export tax and sales and service tax.

Mar'ie said last week direct and indirect tax receipts were estimated at Rp 55.8 trillion (US$23.25 billion), or 0.3 percent below target.

Indirect tax receipts which were expected to be lower than planned were value-added tax and import duties.

Value-added tax is expected to contribute Rp 20.39 trillion or 6.4 percent less than targeted, while revenue from import duties are projected to fall 18.6 percent to Rp 2.8 trillion because of the government's tariff reduction policy.

Mar'ie said the drop in value-added tax revenues was because of the government exempting domestic shipping industry and docking services from the tax, and increases in value-added tax refunds and developments in the automotive and other industrial sectors which were lower than expected.

Indirect tax receipts expected to exceed targets are property tax and excise.

Mar'ie said revenue from property taxes would be Rp 2.28 trillion, slightly higher than the Rp 2.27 trillion target. Excise revenue is estimated to increase 4.6 percent to Rp 4.2 trillion because of rises in the cost of most goods subject to excise.

Income tax revenue is expected to reach Rp 25.49 trillion, 7.5 percent above the target.

Mar'ie said revenue from the non-oil and gas sectors were expected to reach Rp 64.92 trillion. The original target was Rp 64.08 trillion.

Legislators passed into law yesterday amendments made to the 1996/1997 budget. (pwn)