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Case for new taxation authority
Indonesia ranks 51 out of 52 countries in the OECD Tax Administration 2017 report for the ratio of labor force per tax officer.
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Taxpayers consult with tax office staff as they apply for the tax amnesty at East Java Tax Office II in Sidoarjo, East Java, on Aug. 8, 2016. (Antara Photo/Umarul Faruq)
O
ver the last decade, a shortfall in revenue collection has become the norm in this country. To address this nagging problem, the government has tried almost every trick in the tax administration playbook: from introducing electronic services to offering a tax amnesty.
However, efforts to improve the administration side have failed to lift tax collection above the meager level of 11 percent of the gross domestic product (GDP).
Amid talks of modernizing tax IT infrastructure and enhancing third-party data collection and analysis, little attention has been given to the institutional aspect of tax administration, especially the serious problem of understaffing.
If we use the large taxpayers office (Kanwil LTO) as a benchmark, the ratio of taxpayers to tax officers is pretty good, with roughly three taxpayers to every tax officer (including support staff ). No wonder the compliance rate in terms of tax returns processed at this office is 99 percent.
However, Kanwil LTO is an exception. In 2015, the national average was about 500 taxpayers per tax officer with an overall 60 percent compliance rate.
To give an international perspective, Indonesia ranks 51 out of 52 countries in the Organization for Economic Cooperation and Development (OECD) Tax Administration 2017 report for the ratio of labor force per tax officer.
For Indonesia, that ratio is 3,342. For advanced economies like Australia, Finland, France, Germany, the United Kingdom and the United States, the ratios are 595, 526, 271, 348, 593 and 1,621, respectively.
