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The
Jakarta Post, Jakarta
Economists threw their weight behind the House
of Representatives' approval of a government
plan to raise the tax ratio to 13.03 percent
in 2002 to help finance the cash-strapped state
budget, but also warned of possible administrative
glitches. Bustanul Arifin of the Indonesian
Development on Economy and Finance (Indef) said
on Wednesday that the move was necessary as
the country's tax ratio was still among the
lowest in the region.
"It should be understood that the tax ratio
increase does not necessarily mean people will
have to pay higher taxes, but it means more
people are obligated to pay taxes," Bustanul
told The Jakarta Post. "The move is a good step
toward the bid to obtain more revenue from more
taxpayers. "Compared to other countries, our
(tax) ratio is one of the lowest. There are
too many Indonesians who do not pay taxes at
present," he said. Bustanul said that Thailand,
the Philippines and Malaysia had all posted
their tax ratios above 20 percent.
"The
way I see it, 15 percent of the tax ratio is
still realistic," Bustanul replied when asked
what was the ideal rate for the country. A tax
ratio is the ratio between a country's tax income
and its Gross Domestic Product (GDP). The House
state budget committee approved on Tuesday the
government proposal to raise the 2002 tax ratio
to 13.03 percent from the initial figure of
12.08 percent. The prospect of a world economic
slump has forced the government to revise the
2002 state budget draft, including widening
the targeted deficit of the GDP to 2.7 percent
from 2.5 percent. Under the new tax plan, the
number of taxpayers in 2002 is expected to reach
3.5 million, compared to this year's 1.9 million.
As for this year, the government is targeting
to cash in some Rp 156.6 trillion (US$16 billion)
in tax revenue, and Rp 184.7 trillion next year.
Raden Pardede, a senior economist at Danareksa
Research Institute, also welcomed the tax ratio
increase, but stressed that there should be
no rise in the tax rate amid the current economic
problems.
"As long as it intends to increase the number
of taxpayers and not the tax rate, that's okay
by me," Pardede said. However, Pardede warned
the government of possible mix-ups in paperwork
as a significant rise in taxpayers requires
a more efficient and professional administrative
system. "The government needs to gradually set
up a more sufficient system because classifying
so many taxpayers will not be easy." He said
he was referring to the government's estimate
that there would be approximately 9 million
taxpayers in 2004 if the tax ratio increase
continues to take place every year.
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