Govt still needs to increase tax ratio: observer

Jakarta (ANTARA News) - Although its fiscal revenue target for 2010 has been surpassed, the government still needs to increase the tax ratio relative to the gross domestic product (GDP) a tax observer said.

"Last year`s achievement in surpassing the target is very good, yet the government still needs to increase the tax ratio of 11.9 percent in the state budget," said Latif Adam, an economist with the Indonesian Institute of Sciences (LIPI) on Wednesday.

Adam said the government should not be complacent after surpassing the 2010 fiscal revenue target because in other countries the tax ratio had already reached 15 percent of GDP.

He said the government this year was to introduce eight new policies on taxes, something that needs to be appreciated because the policy might help neutralize the non-conducive business climate. However, the government will still need to implement the new policies effectively.

"As a concept, the new policies on tax are already fine. But there would be a lot of obstacles for the government to overcome when they are to be really implemented," he said, adding that the government should make clear all the terminologies such as strategic industries, pioneer industries and the likes in the new tax policies.

Adam also saw the need for distinguishing by geographical locations in the introduction of tax holiday because there are a lot of differences between Jakarta and Kalimantan in terms of infrastructural facilities and human resources.

Adam warned the government of the realities concerning economic-political aspects in this era of regional autonomy in Indonesia. It should be avoided that what has been decided in the central level but could not be implemented at the regional level.

The State Budget Policy Center (APBN), Ministry of Finance, announced last week that almost all realization of tax revenue exceeded the target. Tax revenue reached 744.1 trillion rupiahs or 100.1 percent of the target set in the Revised State Budget (APBN-P) 2010.

Only a few were not achievable, including the Income Tax (PPh) of non-oil which amounted to 97 percent and Value Added Tax (VAT) 95 percent, due to tax restitution respectively stood at 13.4 trillion rupiahs for the PPh and 26.5 trillion rupiahs for the VAT. (*)