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The moral hazard and injustice of another tax amnesty
The trillion rupiah question, then, is whether the second half of this year, or only four years after the previous tax amnesty program, is a good time for the government to grant such a generous tax pardon.
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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, in this photo file. (Antara Photo/Umarul Faruq)
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trapped for more revenue to finance the economic recovery program and fight the COVID-19 pandemic and buoyed by the great success of the 2016-2017 tax amnesty policy, the government plans to launch a similar facility in the second half of this year.
The facility will impose, among other things, a final income tax of only 15 percent on unreported or misreported assets (income) obtained between 1985 and the end of 2015 and will exempt taxpayers from administrative penalties.
Normally, annual incomes of over Rp 500 million (US$35,700) are subject to 30 percent tax.
As opposed to the July 2016 to March 2017 tax pardon, which was based on a special law, the plan for the next round of tax amnesty is stipulated in several provisions of a bill amending the General Provisions and Taxation Procedure Law that was proposed to the House of Representatives recently.
The 2016-2017 tax amnesty program, which the government and even many analysts claimed was greatly successful, did succeed in expanding the tax base, yielding the reporting of more than Rp 4.8 quadrillion ($368 billion) in previously undisclosed assets, Rp 114 trillion in redemption money payments and Rp 21 trillion in other tax receipts.
The trillion rupiah question, then, is whether the second half of this year, or only four years after the previous tax amnesty program, is a good time for the government to grant such a generous tax pardon.
The opponents to such a facility say another tax amnesty period would mostly benefit big conglomerates, including former bank owners, who according to an investigative audit by the Supreme Audit Agency (BPK) in 1999, misused Rp 138.5 trillion (US$15.40 billion) of the Rp 145 trillion in emergency liquidity credit Bank Indonesia extended to help bail out the banking industry in 1998 and 1999.
