Jakarta – The Directorate General of Taxation said on Monday it raised Rp 444.2 trillion ($49.74 billion) in tax revenues in the first nine months of this year, up 18 percent from the same period last year but still lagging its 2010 target.

The figure is only 67 percent of the tax office's target to collect a total 661.5 trillion rupiah this year. Last year it also failed to reach its tax revenue target, by 2 percent.

Analysts say Indonesia needs to lift its low tax collection to improve its long-term finances and reduce reliance on borrowing in bond markets, a move which would help it achieve an investment grade sovereign rating.

Tax office chief Mochamad Tjiptardjo told reporters tax collection this year slowed because of a decline in confidence by taxpayers after a recent case of alleged bribery of a tax official.

But Tjiptardjo remains optimistic the tax office can reach this year's target, because responsibility to draft tax rules will soon move to the fiscal policy office, allowing the tax office to concentrate on collection. The government is taking on firms such as palm oil giant Wilmar over alleged unpaid taxes.

Finance Minister Agus Martowardojo last month said the government aims to lift tax collection by Rp 100 trillion next year.

Investors have poured into the country's bond markets in the past year on hopes of an investment grade rating, but rating agencies are looking for the government to improve poor bureaucracy and rampant corruption.