Ritonga bullish about income tax revenues
JAKARTA (JP): Tax Director General A. Anshari Ritonga is optimistic about achieving the Rp 40.6 trillion (US$5.07 billion) target of income tax receipts set for the 1999/2000 fiscal year ending next March, despite a steady fall in time deposit rates.
Ritonga confirmed on Wednesday that income tax receipts from time deposits had been declining sharply, due to a steady decrease in interest rates, but he said this would be more than offset by bigger revenues from other sectors.
"I think the positive impact of high interest rates on time deposits to as high as 70 percent in the last quarter of last year was a bit exaggerated," he said.
The government charges a flat (final) 15 percent income tax on the interest income from time deposits.
He said even though income tax receipts from time deposits in the 1998/99 fiscal year more than doubled, to Rp 15 trillion from their target of Rp 7 trillion, their proportional role in total income tax revenue was only about 30 percent, and in total tax revenue about 17.15 percent.
Ritonga said despite the 13 percent contraction in the economy last year and the losses suffered by most big companies, leading to reduced income tax payments, total tax receipts in the 1998/1999 fiscal year reached Rp 87.4 trillion, much higher than the Rp 58 trillion target.
The tax directorate general administers only income tax, value added tax and property tax, while export tax, import duty and excise tax lie under the jurisdiction of the customs and excise tax directorate general.
He attributed the higher tax receipts to increased revenue from agrobusinesses, export-oriented companies, mining ventures and financial companies engaged in foreign exchange transactions.
"Since the macroeconomic condition in the current fiscal year is predicted to be much better than last year, there is no reason at all to doubt the feasibility of the income tax revenue target for the current fiscal year."
The government and the International Monetary Fund have predicted economic growth for the current fiscal year at between minus 1 percent and zero growth, compared to a contraction of 13 percent last year.
Ritonga estimated the expected decline in income tax receipts from time deposits (due to lower interest rates) would be more than offset by increased receipts from other sectors.
"We will surely receive increased income tax revenue from the sales of state companies," he said.
Over the past eight weeks alone, the privatization program has raised more than US$880 million for the state coffers, or more than 50 percent of the $1.5 billion target set for the whole fiscal year.
Tax receipts from this program are derived from the income tax imposed on capital gains.
"We are also expecting considerable income tax revenue from asset sales currently being conducted by the Indonesian Bank Restructuring Agency."
He said the balance between the sales value and book value of assets auctioned by the restructuring agency was subject to income (capital gains) tax.
He said another new major source of income tax revenue is interest income from the bonds, worth more than Rp 350 trillion, which the government will soon issue to recapitalize private and state banks.
"Moreover, since the economy is predicted to contract only by 1 percent, compared to minus 13 percent last year, income tax receipts from the corporate sector will accordingly be much bigger."
However, Ritonga cautioned that all the projections assume that the situation will remain stable and peaceful before and after the June 7 elections. (vin)