Case for new taxation authority

Glenn Polii
Staff member at the Directorate General of Taxation at the Finance Ministry

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Jakarta / Thu, November 23, 2017 / 10:35 am

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)

Over 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 ...