T

his has once again put the Indonesian Tax Office under pressure. According to the Corruption Eradication Commission (KPK), Tommy was allegedly caught red handed accepting Rp 285 million (US$30,000) in bribes from a businessman, James Gunardjo.

Authorities suspect that there is a so–called “tax mafi  a” among which many tax-related fraud offenses are orchestrated. In relation to this, the KPK has expressed its commitment to investigate further to see how deeply rooted the rot really is.

According to media reports, Tommy was allegedly accepting bribes for fraudulent tax refunds for a tax payer. Tax fraud itself is a major problem in most if not all countries around the world. According to a report from the Tax Justice Network (November 2011), for example, total losses from tax evasion worldwide is estimated to be in excess of US$ 3.1 trillion which accounts for 5.1 percent of world gross domestic product (GDP).

This is believed to have been caused largely by the operation of "shadow economies" where no tax
is paid and which are by nature invisible to officialdom.

Further, the Tax Justice Network also stated in its report that, for Indonesia, the estimated losses were Rp 158 trillion. The size of the shadow economy in Indonesia, according to the report, is estimated to be around 19 percent of the nation’s GDP.

The Tommy case and many other bribery cases make people wonder why the decision to offer or accept bribes appears to be commonplace among businessmen in Indonesia. In fact, according to the results of Ernst & Young’s 2012 global fraud study, 60 percent of Indonesian respondents believe that making cash payments for winning new business is a justifi  able practice.

In Tommy’s case, the authorities believe that the main reason why someone would attempt to bribe him is to gain something in value such as a higher than normal tax refund. According to the supporters of the so–called "game theory", bribery is an outcome of players (i.e. briber and bribe) selecting their optimal strategies by considering their own as well as other’s actions.
Many experts believe that a major reason many people pay bribes to government offi  cials is that, at least from their point of view, the net payoff for doing so is higher than not paying the bribe.

On the other hand, corrupt government officials also perceive accepting bribes to result in more benefits than costs. Studies have revealed that in countries where being a briber or a recipient of bribes is more beneficial than being an honest businessman or government offi  cial, bribery
flourishes. The primary benefit of bribing is fi  nancial gain for both briber and recipient whereas the cost of the offense is the risk of detection and apprehension by the authorities.

In the Tommy case, accepting a Rp 285 million bribe can be seen as the benefi  t he would have expected from agreeing to misuse his authority as a tax offi  cer for the briber’s sake.
We can assume that such an amount of money outweighs the perceived risk of being caught by the
authorities and thus the offender’s final decision is to accept the bribe. Nevertheless, behavioral scientists believe that there is more to bribery than just fi  nancial matters. An important element believed to deserve consideration is people’s intrinsic motivation (i.e. describing one’s moral principles or values) to pay taxes, known also as the “tax morale” which depends on various elements.

Tax evasion experts believe that one of the most important elements is the public’s perception of how the government will use the tax money they have paid. In countries where corrupt practices among government offi  cials is part of everyday life, many people will have a low tax morale since they will assume that their tax money will end up being misused or embezzled by corrupt offi  cials. For this reason building and upholding the public’s trust is essential in reducing tax-related fraud in a country. With a number of high-profile cases already under investigation, the Indonesian Tax Office needs to take a more active role in safeguarding public trust by, among other things, strengthening its internal controls.

The same also goes for other government offi  ces to ensure their integrity and transparency in using taxpayers’ money. After the case of Gayus, many hope that the arrests of Dhana and Tommy will serve as deterrents to future tax-related fraud in Indonesia. Credit should be given to the KPK for its tireless efforts in uncovering tax-related bribery in Indonesia.

The higher the capability of the authorities to detect tax bribery, the higher also the perceived cost of the offense which may eventually result in lower net payoffs compared to those of not paying or accepting bribes.