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Tax office should do more, talk less: House
Failing to meet the ambitious tax revenue target this year would severely tarnish the reputation of the new government, a top lawmaker has said, describing the countryâs top taxman as someone who promises many things but achieves little
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ailing to meet the ambitious tax revenue target this year would severely tarnish the reputation of the new government, a top lawmaker has said, describing the country's top taxman as someone who promises many things but achieves little.
'Once the tax revenue target is not met, public trust in the government will decline,' House of Representatives budget committee chairman Ahmadi Noor Supit said on Thursday.
Consequently, the too ambitious economic targets set in the revised 2015 state budget could become a 'political boomerang' for the government, he warned.
President Joko 'Jokowi' Widodo is relying on ambitious tax revenue targets this year to finance infrastructure spending. The tax revenue target has been set at Rp 1.29 quadrillion (US$99.50 billion) this year, about 30 percent higher than last year, with such an increase seen by many analysts as unrealistic and unachievable.
This year, lawmakers have approved the disbursement of Rp 4.1 trillion to the Finance Ministry's taxation office to cover an employee salary hike to boost their performance.
Sigit Priadi Pramudito, the director general of the Finance Ministry's taxation office, has promised to make extra efforts to ensure that the tax revenue target is met.
However, tax revenues only stood at Rp 198.2 trillion, or 15 percent of the target, in the first quarter of this year, lower than the Rp 210 trillion the government reaped in the same period last year.
'We will soon summon the director general of the tax office so he can prove that he is not just a big mouth,' Ahmadi said.
On Thursday, the House budget committee, which has the authority to deliberate and approve government budgets, held a meeting with University of Indonesia tax expert Darussalam and former tax office chief Darmin Nasution to discuss the possible breakthroughs to boost tax revenues this year.
Darmin said that a potential shortfall in tax revenues might be inevitable, given the slowing economy and low commodity prices, which had hurt the earnings of local companies.
Darmin, who led the tax office from 2006 to 2009, told lawmakers that the major weakness in Indonesia's tax system was the lack of information and data available to tax employees, who consequently had limited ability when they needed to verify taxpayers' data.
Some of the current government's proposed policies to boost tax income, such as a tax amnesty, might not be feasible in the short-run. A tax amnesty is a policy that gives immunity against prosecution for tax offenses in a bid to lure businesspeople to repatriate their money.
'I'm not sure if the government really can be firm in implementing a tax amnesty. In the past we debated the policy for more than one year and eventually decided not to implement it,' said Darmin.
Meanwhile, Darussalam argued that the implementation of a tax amnesty must be followed by the collection of sufficient data by the taxation office.
'In some countries that apply tax amnesties, the governments always had the needed data so that they could threaten their taxpayers: 'Hey, if you don't pay your obligation, then I have your past tax history right here,'' said Darussalam.
