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Tax amnesty may cause shortfalls in standard tax collection: ADB
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Asian Development Bank (ADB) economist Emma Allen (left to right), economist Priasto Aji, deputy country director for Indonesia Sona Shrestha and economist Steven Tabor give presentations at a press conference on the 2016 Asian Development Outlook in Jakarta on Sept. 27. (JP/Anton Hermansyah)
T
he Asian Development Bank has warned about the displacement effect of the tax amnesty program, arguing that the tax office’s limited resources are primarily focused on the program and as such, the office is devoting fewer resources to collecting tax.
The program had forced tax officials to work hard to introduce the scheme and its rules. Meanwhile, tax revenue has experienced a substantial shortfall, reaching just Rp 729.7 trillion (US$56.45 billion) on year-to-date basis, or 53.84 percent of the targeted Rp 1.36 quadrillion.
"Tax administration is very much focused on tax amnesty at the moment. What happens to corporate tax, private tax and value-added tax?" ADB economist Steven Tabor said at a press conference in Jakarta on Tuesday.
He added that the one-time gain from the tax amnesty program was not intended to fill a tax shortfall because it was aimed at increasing the tax basis in the long run. Conventional tax collection must be maintained to prevent an excessive drop in the fundamental sources of tax revenue, he said.
"The tax amnesty income will only be 0.5-0.6 percent of GDP [gross domestic product]. Next year the government wants to introduce tax reform, which is more important," Tabor said.
From the program, the government has so far gained Rp 58.6 trillion, equal to 35.52 percent of the Rp 165 trillion target. (ags)
