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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