T

he government has decided to postpone the imposition of new taxes on toll road users and revoke a regulation that requires proof of bank deposit taxes '€” underscoring challenges to efforts in collecting more taxes to meet this year'€™s ambitious target.

'€œWe have yet to confirm the imposition of a value-added tax on toll road users by April 1,'€ Finance Minister Bambang Brodjonegoro said on Friday, while refusing to explain exactly why.

The new tax on toll road users was announced on Thursday by the ministry'€™s tax office in a press statement that said a 10 percent value-added tax on toll road users will be imposed starting April 1.

'€œThe timing is not perfect yet for imposing the regulation,'€ Public Works and Public Housing Minister Basuki Hadimuljono said.

'€œWe have many considerations, such as the current depreciation of the rupiah as well as the recent regulation on toll road rate increases. We will find the best timing so that the policy will not be a burden for the people,'€ he explained.

Twenty toll road routes will see fares increased starting in the October to December period of this year, including Jakarta-Bogor-Ciawi as well as Cikampek-Padalarang in West Java.

A final decision on the toll tax would be announced later this month and the policy would not be postponed until next year, according to Basuki.

According to the Finance Ministry'€™s estimation, toll-road taxes will bring in additional revenue of up to Rp 500 billion (US$37.7 million) annually, which is relatively insignificant compared to the Rp 1.48 quadrillion tax collection target set in the revised 2015 state budget. This year'€™s tax collection target is Rp 290 trillion higher than last year.

The current administration announced its strategies to achieve the highest-ever tax collection target, including the imposition of taxes on new items such as luxury bags, gemstones and property purchases. But critics called this target unrealistic given the nation'€™s low tax compliance.

Bambang also announced Friday that the government had revoked a new tax regulation that required banks to attach receipts of tax payments to customers'€™ deposits.

'€œI confirm that the new tax regulation, which initially required banks to report their tax cuts on time deposits, will be revoked as of today,'€ Bambang said.

'€œPreviously, we postponed the policy, but we decided to revoke it after our review showed that it had an inadequate legal basis,'€ he added.

The tax on time deposits requires banks to file reports of income tax (PPh) for customers'€™ time deposits for each customer, annulling the previous practice of reporting collectively.

Bankers and the Financial Services Authority (OJK) have expressed their objections toward the new tax policy based on the consideration that it would violate the banking law stipulating that banks are required to uphold the secrecy of customers'€™ data, except for the purposes of legal investigations.

'€œI am worried that our time deposit customers will feel uncomfortable because their funds can be monitored by tax officers. That situation will prompt customers to move their funds overseas,'€ Bank Negara Indonesia president director Gatot M. Suwondo said recently.

Total state revenues are expected to hit Rp 1.76 quadrillion this year, 84 percent of which will come from tax revenues.

Bambang has identified a potential shortfall in tax revenues as the biggest fiscal risk facing the Indonesian economy this year, as the country aimed to spend a historic high of Rp 1.98 quadrillion this year, Rp 290 trillion of which would be for growth-generating capital expenditure.