Tax revenue target hailed, questioned

Tax revenue target hailed, questioned

JAKARTA (JP): Most legislators and business people were
satisfied with the government's tax revenue target set in the
1996-1997 draft state budget announced yesterday, but others felt
the target should have been set higher.

A.A. Baramuli, a member or the House of Representatives from
the Golkar faction, was optimistic the government would reach its
tax revenue target because Indonesia's tax ratio, or the
proportion of tax collected compared to the country's gross
domestic product (GDP), was currently a low 12 percent, compared
to other Southeast Asian countries which reached 20 percent.

The government, in its 1996-1997 draft state budget, envisaged
a 23.2 percent increase in revenues from income tax, from Rp
19.23 trillion (US$8.36 billion) this fiscal year to Rp 23.7
trillion, and a 30.8 percent increase from value-added tax, from
Rp 16.65 trillion to Rp 21.78 trillion.

Legislator Aberson M. Sihaloho from the Indonesian Democratic
Party (PDI) faction, however, contended the state budget, which
was set to balance at a total of Rp 90.6 trillion (US$39.7
billion) could actually be set as high as Rp 100 trillion, if the
government was willing to intensify tax collection.

"The director general of taxes last year said that revenues
from income and value-added taxes which could not be collected
reached Rp 22.6 trillion. So why has the government settled for
an increase (from taxes) of less than Rp 10 trillion in its draft
budget?" he asked.

No problem

President of Bakrie & Brothers Tanri Abeng and businessman
Sudwikatmono said the government's decision to increase tax
earnings in the upcoming fiscal year would pose no problem to
businesses, as long as the government could return the revenues
in the form of a better business atmosphere.

Both of them pointed out that tax revenues should be used to
encourage domestic growth and should not instead become a burden
to businesses.

"Part of the revenues derived from taxes should be used for
developing infrastructure facilities which are needed to
facilitate the activities of businesses and industries,"
Sudwikatmono said.

Similarly, Tanri acknowledged that better working conditions
would help increase the profits of businesses and industries,
which, in turn, would enable them to pay more taxes.

"An increase in tax revenues is actually a reflection of
greater economic activity and a more prosperous society," he
said.

He considered the target realistic and felt it could even have
been set higher. "I think there are still many sources which
remain untapped," he said.

Director General of Taxes Fuad Bawazier said yesterday that to
reach the tax revenue target, the government would intensify tax
collections, broaden the tax base by finding new taxpayers and
improve tax administration.

"We have applied these methods since last year and, so far,
the results have been good," he said.

Minister of Finance Mar'ie Muhammad yesterday asked business
people not to ask for tax exemptions, because such requests would
disturb the country's taxation system and disrupt the
government's plan to increase tax revenues.

In a bid to increase tax revenues, he said, the government
would take every possible step to enforce the law. (04/pwn)

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