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Anomaly in tax revenues: Indonesian economist

17th August 2012 | 2.419 Views
Anomaly in tax revenues: Indonesian economist
Enny Sri Hartati. (twitter)
Jakarta (ANTARA News) - A leading Indonesian economist said there is anomaly in the country`s tax revenues pointing to "very" high tax rates with low tax revenue ratio.

Enny Sri Hartati, the director of the economic think tank, the Institute for Development of Economics and Finance (Indef), said the anomaly was caused by limited tax objects.

Enny cited, the tax on a restaurant in Indonesia is 10 percent higher compared to an average of 7 percent in other countries.

The number of those paying taxes is small especially among the high income people, she said.

She said 20 percent of the Indonesian people control 48 percent of the the country`s Gross Domestic Product (GDP).

The tax ratio could have been increased from the income of the 20 percent rich people, she said.

She said so far income tax revenues has come mainly from fixed income people and from value added tax, adding the contribution from the 20 percent high income people is "very" low.

The real tax payers in the country are dominated by middle to low income people, who could not evade paying tax, which is cut from their salaries, she said.

"It is different with businessmen. How their income could be cut. This is the injustice that happens in tax," she said.

Therefore, in order to create fairness corporate tax should be set first and a mechanism should be created on tax to be paid by the 20 percent richest Indonesians, she said.

President Susilo Bambang Yudhoyono announced draft state budget last night with tax revenues target set at Rp1,178.9 trillion making up 80 percent of the state income target of Rp1,507.7 trillion.

The contribution of the tax revenue to the total state income represented an 16 percent increase from the target set for 2012.

The rise in tax revenues also means an increase in the tax ratio to the country`s GDP from 11.9 percent in 2012 to 12.7 percent in 2013.