Thursday, August 19, 2010

Tax revenue target unrealistic: Observers

The government’s goal to increase the tax revenue by 14.5 percent, or Rp 106.26 trillion, next year to Rp 839.5 trillion (US$93.18 billion) will be tough without extra efforts, experts said.

The 2011 draft state budget delivered by President Susilo Bambang Yudhoyono in the annual state of the nation address at the House of Representatives and Regional Representatives Council on Monday, projects total tax revenues of Rp 839.5 trillion, or 77 percent from the overall state revenue.

“The target is only possible if the government focuses on intensification of tax income from several specific sectors as well as the extensification of individual taxes,” University of Indonesia’s tax observer Darussalam told The Jakarta Post on Wednesday.

Darussalam said tax income from oil and gas, mining, agricultural and forestry sectors needed to be pushed in order to meet the target, as the sectors were under-enforced potential tax contributors.

“The government also needs to increase the number of individual tax payers. Tax income in developed countries is dominated by individual taxes. But here, corporate taxes are a lot more than individual ones,” he said.

Chamber of Commerce vice chairman of Trade, Distribution and Logistics Division, Benny Soetrisno, said the tax revenue target could be achieved only if the government increased the tax coverage on business sectors. He said many companies, even those who have business permits, did not pay tax. “Many businesses did not have tax identification numbers although they had acquired their business licenses. That’s where the government should focus on,” he said.

Experts are also concerned about weak 2010 tax revenues. Former finance minister Sri Mulyani Indrawati in March revised the government’s target for this year’s tax revenue to Rp 733.24 trillion, Rp 9.5 trillion lower than the previous target at Rp 742.74 trillion in the original 2010 state budget.

The revised figure in the revised 2010 state budget is 75.22 percent of the estimated total state revenue of Rp 974.82 trillion.

Sri Mulyani said the downward revision was due to a lower tax base resulting from a below-target revenue in 2009.

Taxation revenue comprises of the funds collected by the Finance Ministry’s Directorate General of Taxation and Directorate General of Customs and Excise.

In his address, Yudhoyono also mentioned a target to increase the tax-to-GDP ratio by 0.1 percent in 2011.

“The tax ratio will increase from 11.9 percent in the 2010 state budget to 12 percent in 2011,” Yudhoyono said.

Finance Minister Agus Martowardojo quickly responded to the target, saying that the government must work hard to achieve the target.

“The GDP continues to grow. In early 2010, our GDP was about Rp 5,000 trillion. Up to June, it grew to about Rp 6,000 trillion. Therefore the percentage [tax ratio] automatically slides.

“So 12 percent will be a very hard work,” he said. (est)

Source: TheJakartaPost.com

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