Amendments of tax law may be until 2007

Rendi A. Witular, The Jakarta Post/Jakarta

The newly proposed tax legislation amendments are unlikely to be passed anytime soon with some lawmakers saying it would be difficult to complete the deliberation of the amendment bills amid fierce opposition from the business community.

The chairman of the House of Representatives' finance commission, Paskah Suzetta, pointed on Friday to various issues in the proposed amendments that needed to be clarified and discussed further with the stakeholders.

"With the recent fuss over the draft tax legislation amendments, more input from various parties will be needed to ensure that the laws are not contrary to the public interest. We expect the implementation of the laws to be delayed from 2006 to 2007," said Paskah.

Paskah, who chaired a team set up to deliberate the revisions, made the comment on behalf the powerful Golkar Party, which has the most seats in the House.

"The government claims that it has launched an intensive campaign to introduce the amendments to the public. But the facts show that there is growing concern among members of the public over the drafts, especially the greater powers to be given to the tax office," he said.

Based on the initial government schedule, the amendments -- the third raft of tax legislation reforms since 1983 -- should have come into effect on Jan. 1, 2006.

The three amendment bills discussed by the House involve changes to Law No. 16/2000 on general taxation arrangements and procedures, Law No. 17/2000 on income tax and Law No. 18/2000 on VAT and luxury tax.

Paskah said the Golkar Party wanted the proposed changes to accommodate four principal issues; simplification of tax administration, a reduction in tax rates, the offering of a tax amnesty, and a reduction in the powers of the tax office.

Golkar would also urge the government to complete drafting the arrangements for a tax amnesty law by November.

"The tax reform package cannot be effectively implemented if there is no legislation authorizing a tax amnesty. We want to ensure that once the tax reform process starts, nobody will evade their taxes," he said.

Separately, another member of the commission, Emir Moeis, agreed to the Golkar proposal to delay the implementation of the tax legislation amendments until 2007 following the recent public outcry.

"We should be careful when deliberating the amendment bills, especially given the opposition from the business community. It would be better for the government not to force the reform issue next year to avoid problems in the future," said Emir.

Emir, who also sits on the House special committee deliberating the amendments, said he was speaking on behalf of the Indonesian Democratic Party of Struggle (PDI-P) -- the second largest party in the House.

He said the PDI-P basically wanted the amendments to the tax legislation to enshrine the principles of equity and justice, and to close off any possibility of the powers given to the tax office being abused by the government to quash its opponents.

"The most important thing for the PDI-P is that the draft amendments will not be used by the government to prevent its political opponents from voicing criticism," he said.

In addition, he said the amendments should also incorporate provisions that would prevent unscrupulous tax officials from extorting taxpayers, particularly members of the business community.