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Indonesia might offer a second tax amnesty. But how successful was the first?
The government is seeking to offer a second tax amnesty to fix the budget deficit, but critics argue such a move would encourage tax evasion.
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Sweet proposal: People pass by a banner promoting the government's tax amnesty at the Tanah Abang textile market in Central Jakarta. (Antara Photo/Wahyu Putro A)
W
ith plans of a new tax amnesty resembling that of 2016, the government seeks to increase state revenue as a quick fix for a huge budget deficit caused by the coronavirus pandemic, but critics warn that a second program may encourage tax evasion.
Coordinating Economic Minister Airlangga Hartarto said on May 19 that the plan was included in a proposed amendment to Law No. 6 of 1983 on general provisions and tax procedures, along with a plan to increase value-added tax (VAT), high-net-worth individual (HNWI) tax and many other changes.
He added that President Joko “Jokowi” Widodo had sent a letter to the House of Representatives, implying the discussion between the government and lawmakers would begin this year.
So far, there is little clarity as to how a second tax amnesty might play out and why the government wants to bring it back during the pandemic, with some suspecting lobbying pressure from businesspeople.
However, Indonesian Chamber of Commerce and Industry (Kadin) chairman Rosan P. Roeslani did not express direct approval.
“If the discussion was carried out well and involved all stakeholders, we would respond positively,” Rosan said during a webinar on Friday, though noting that many countries had offered a tax amnesty more than once and it could counter declining tax revenue.
Meanwhile, the Indonesian Young Entrepreneurs Association (Hipmi) clearly backed the idea. Hipmi head of finance and banking Ajib Hamdani told The Jakarta Post on May 23 that, “the tax amnesty policy deserves to be continued”.
