"The government should boost its share of receipts from the tax sector, as the current tax ratio against the Gross Domestic Product (GDP) is as low as 12.5 percent," Enny Sri Hartati said.
Jakarta (ANTARA News) - The Director of the Institute for Development of Economics and Finance (Indef) said on Thursday that she has made a suggestion to the government to raise its tax ratio to help cover the deficit in the state budget.

"The government should boost its share of receipts from the tax sector, as the current tax ratio against the Gross Domestic Product (GDP) is as low as 12.5 percent," Enny Sri Hartati said.

She added that the lowest percentage for an ideal tax share in the state budget should be at least 14 percent of the GDP.

With the volume of the state budget`s draft pegged at Rp1,600 trillion, which includes a tax ratio of 12.5 percent of the GDP, the government will have to continue depending on external debt.

"The Indonesian government has always remained content with a debt ratio lower than 30 percent, which is not good," Hartati said.

She added that if the government continues to rely on external debts, Indonesia will also face a similar crisis as the one the United States and Europe are currently battling.

"Europe and the United States are facing this crisis because they were unable to manage their debts. They allocated capital to sectors, which could not be refinanced, and eventually became bad," she said.

Therefore, the government should raise the tax ratio and cover the state deficit, instead of taking on external debt, Hartati added.

While the Ministry of Finance pegged tax revenue at Rp873 trillion under the 2011 state budget, it has raised it to Rp1,016 trillion for 2012.

Commenting earlier on the hike in civil servants' pay laid down in the draft of the 2013 state budget, Hartati said that civil servants` salaries have not been hiked significantly.

"It is reasonable for the government to raise civil servants' salaries because inflation has also increased, but the pay hike is not in keeping with the rise in inflation," she said.

She added that the pay hike in the draft of the 2013 state budget was immaterial as civil servants` purchasing power has declined in the face of higher inflation rates.

The government currently plans to raise civil servants` salaries by seven percent, which is even lower than last year`s increase of 10 percent.

Hartati also said that the allocation for civil servants` expenditure, which was expected to be raised by 20 percent to 25 percent, is too low.

"An increase of seven percent is as good as no increase when compared with the rise in the prices of goods," she said.

She also criticized the imbalance in the salary increase for Level I and II officials, compared with the lower ranked Level III officials.

"The salaries for Level I and II officials have risen drastically, but for Level III officials, the increase has been insignificant," Hartati said.(*)

Editor: Heru Purwanto
Copyright © ANTARA 2012