Revenue targets hiked by up to 20%

JAKARTA (JP): The government said on Monday that it had raised its revenue targets from taxes, privatization and asset sales, to between 5 percent and 20 percent more than stipulated in the state budget to help contain its deficit to as much as 3.7 percent of the gross domestic product (GDP).

Minister of Finance Rizal Ramli said the higher revenue targets were the government's internal targets only and not part of those stipulated in the state budget which had been approved by the House of Representatives.

"I have asked all directors general in the Ministry of Finance to raise their targets, to push them to be more creative and innovative in achieving them," Rizal said after the House passed the bill on the 1999/2000 state budget implementation.

He refused to specify the increases, saying only that the government's internal targets were not for public knowledge.

Rizal gave a range of 5 to 20 percent, with the Indonesian Bank Restructuring Agency (IBRA) apparently required to raise twice as much as the increases set on other directorates.

Under the revised state budget, tax revenue is set at Rp 185.26 trillion (about US$16.3 billion), excise revenue at Rp 17.6 trillion, profits from state-owned enterprises at Rp 9 trillion, privatization proceeds at Rp 6.5 trillion and IBRA asset recovery at Rp 27 trillion.

Next to the higher revenue targets, the government has also undertaken the politically unpopular decision of hiking fuel prices and electricity rates.

Without the above measures, the state budget deficit could possibly spread to about 6 percent of the GPD as a result of the plunge in the rupiah to the U.S dollar and soaring domestic interest rates.

As of June 15, tax revenue stood at Rp 73.25 trillion, or about 39.54 percent of the original target set for this year.

Rizal said to help boost tax revenues, the government would take various steps, including a tax amnesty to encourage more people to register as taxpayers.

"A tax amnesty allows those who haven't paid their taxes in full to escape penalty, but in exchange, they must repay some of the taxes they owe."

He added that the government would also impose a random post audit on taxpayers to check on their compliance.

"Because of the weaknesses in our self-assessment system, we want to make the post audit very selective to get optimum results," he explained.

Another step would be to do a search on the registration of taxpayers living in the city's affluent areas, such as Pondok Indah in South Jakarta.

But many analysts doubt the feasibility of the higher tax revenue targets due to slower economic growth this year and the cancellation of several tax measures that were planned earlier.

Among the tax measures canceled was the imposition of the 10 percent value-added tax on farm produce.

The government also recently announced that it had exempted several items from the list of products subject to the luxury sales tax.

Economic woes and domestic political instability have also spooked market confidence, thus jeopardizing privatization and asset sales targets.

The director general for state enterprises, I Nyoman Tjager, warned that his office might have to settle for a lower target of only Rp 4 trillion (compared to the original target of Rp 6.5 trillion) from the sales of state companies this year due to unfavorable conditions. (bkm)