Ceremony, pomp as 10 millionth taxpayer feted

Rendi A. Witular, The Jakarta Post, Jakarta

The Presidential Palace was suddenly turned into a glamorous stage on Wednesday to celebrate the self-proclaimed success of the Directorate General of Taxation in expanding the taxpayer base to 10 million companies and/or individuals.

With a smile of delight, President Susilo Bambang Yudhoyono shook the hand of Imam Suyanto, the principal of Junior High School No. 143 in North Jakarta, the recipient of the 10 millionth taxpayer number.

In front of the audience, consisting of several noted government and state officials, legislators, businesspeople and celebrities, Susilo repeatedly thanked Director General of Taxation Hadi Purnomo and his staff for their good work in increasing the tax base.

However, Susilo and the audience may not be aware that some of the 10 million taxpayers claimed by the tax directorate may only exist on paper as the directorate could not verify the actual number of people who are truly paying their taxes.

"The 10 million taxpayers are those who have received a taxpayer number application form from us ... We still don't know the exact number of people who have sent back the completed forms and paid their taxes," admitted Hadi on the sidelines of the ceremony.

Hadi, however, said he believed that most of the people receiving the forms would eventually comply with the tax regulations and honestly pay their taxes since the directorate had sufficient data of their wealth from various sources.

To increase the number of taxpayers, the directorate has been sending out millions of tax number application forms to those it has categorized as potential taxpayers during the past few months.

As of the end of last year, only 3.67 million of the country's 220 million population paid taxes -- just 13.5 percent of the Gross National Product (GNP) -- one of the lowest among major Asian economies.

Hadi said the sending of the application forms were not merely to force companies or individuals to comply with the tax regulations but also to make the public more aware of their obligations as well as to learn the whereabouts of taxpayers.

"From this taxation drive, we also want people to realize their rights and obligations of paying their taxes. We are unlikely to take any stern punishment yet for those who are still unwilling to get a taxpayer number and start paying taxes," said Hadi.

He added that the tax directorate would give a six-month period for people to apply for a taxpayer number and send it back or face administrative sanctions.

The tax directorate claims that with an increase in the tax base this year, the government is expected to reap an additional Rp 5 trillion (US$490 million) from the added number of taxpayers this year.

In the second revision of the tax revenue in the budget, the government is forecasting Rp 352 trillion, or 13.3 percent of GDP. It will account for around 70 percent of the total state revenues this year.

During the ceremony, President Susilo urged people to honestly pay their taxes in order to create good governance, aside from urging the tax directorate to uphold fairness and transparency in collecting taxes from the public.

"I hope people are honest in paying their taxes. As for the tax directorate, I do hope that with the new technology and a more developed taxation system, irregularities in the collection of taxes will be halted," said Susilo.