Bankers oppose tax office's controversial plan
Bankers oppose tax office's controversial plan
Dadan Wijaksana, Jakarta
The central bank and top bankers have raised objections to a
proposal from the tax office that seeks access to information on
bank accounts, saying it runs counter to the code on banking
secrecy stipulated under the banking law.
Bank Indonesia Governor Burhanuddin Abdullah said that Banking
Law No. 10/1998 should first be amended if the request were to be
implemented.
"At present, the procedures say that the banking secrecy code
may be set aside only under special circumstances -- at the
request of the minister of finance, the police and the Attorney
General's Office (AGO).
"Thus, the minister of finance may ask for information on a
depositor's account from the BI governor. This system has been in
operation for some time, and we'll stick with it for now,"
Burhanuddin said on Wednesday.
The ministry of finance oversees the tax office.
The Directorate General of Taxation has recently asked the
central bank to be allowed to obtain information about the source
of funds kept by depositors in banks as part of its bid to boost
the number of taxpayers, and eventually increase tax revenue.
The office argued that the number of people eligible to pay
tax -- just over 2 million at present -- would rise significantly
under this move.
The tax office has been under pressure to collect more tax
revenue -- now the largest contributor, at more than 70 percent,
to the state budget. Ironically, however, around half of the tax
revenue is used to service the government's huge public debt.
But the plan has thus far raised objections from various
quarters, notably the banking sector, which has claimed that such
a practice could hurt the banking industry as a whole.
President of Bank Negara Indonesia (BNI) Sigit Pramono has
been the latest to voice objections, saying that the move could
erode hard-won public confidence in the banking sector and,
ultimately, prompt massive runs.
"We object to the plan. It has the potential to discourage
people from depositing their funds in local banks," Sigit told
The Jakarta Post.
"It could also derail efforts by the banking sector to regain
public trust. I'm sure there must be other ways to boost tax
collection other than through this measure."
Meanwhile, Sjarifuddin Alsha, director for the value-added tax
unit at the Directorate General of Taxation, who is also a member
of the so-termed tax reform team, told the Post on Thursday that
the plan was also aimed at improving the credibility of the
banking sector.
"If it is adopted, it will ensure that the money stashed in
our banks is legitimate and originates from a lawful source --
which could in turn lift the image of the banking sector.
"Customers have nothing to fear if they earned their money
from lawful business activities. Those who are afraid are likely
to have something to hide," Sjarifuddin said, adding it would
also boost bank compliance in the antimoney-laundering drive.
"We have only 2 million taxpayers in a population of more than
200 million: There must be plenty of people eligible to pay tax
who are evading their obligations."
He added that discussions were under way to look deeper into
the issue, involving officials from the tax office and ministry
of finance, the central bank and also the banking industry.