DPR urges government to deliver four bills on tax reform soon
DPR urges government to deliver four bills on tax reform soon
JAKARTA (JP): The government, which wants to revise the
country's tax system to increase revenues, was challenged
yesterday by the House of Representatives (DPR) to deliver four
bills on taxes by the end of this year.
A vice chairman of the House's Commission VII, Moeharsono
Kartodirdjo, said in a hearing with Director General of Taxation
Fuad Bawazier yesterday that the government should deliver bills
on a value added tax (VAT), sales tax, income tax and land and
building tax (property tax) by December.
"The sooner the better," Moeharsono said.
Bawazier, however, replied to members of the commission, which
deals with finance, trade and logistics, that he is afraid this
will not be possible because draft-bills must first be submitted
to his superior, the Minister of Finance.
He added that the minister himself will hand over the bills to
the State Secretariat, which will seek approval from the
President before submitting them to the House. "It is the
standard procedure," he said.
Minister of Finance Mar'ie Muhammad said recently that tax
reform, which will expand allowable withholding and offer more
transparency and fairness, will be proposed to the House in the
current fiscal year.
According to the minister, himself a former director general
of taxation, the current ten year old tax law is no longer
relevant to the present state of the economy.
Citing an example, Bawazier said yesterday that business
transactions, both financially and legally, have become more
complicated.
"We now have build-operate-transfer transactions, buy-and-rent
transactions, grants and many others," he said, adding that the
existing tax laws are inadequate in the face the changes.
He said he has set up a team of experts to draft the four
bills. "The team is still studying legal and administrative
aspects of the bills," he noted.
Corruption
Meanwhile, a commission member, Andi Hasan Machmud said at
yesterday's meeting that corruption and collusion between
businessmen and tax officials has hampered the growth of tax
revenue.
"The government's tax revenues would be 25 percent higher if
tax officials were disciplined," he said.
The government, under its budget plan, expects a 20.4 percent
increase in tax revenues to slightly over Rp 34 trillion (US$15.7
billion) this fiscal year from Rp 28.24 trillion budgeted for
last fiscal year.
Machmud said that many tax officials are corrupt and help
business people avoid full payment of taxes.
The Directorate General of Taxation should impose "shock-
therapy' to eliminate such bad habits, he said.
"Fire some five or ten corrupt officials and announce their
names publicly. It will frighten the others," he told Bawazier,
adding that Bawazier should not think esprit de corps precludes
this approach.
The commission also urged Bawazier to tax social foundations
which exist not to do charitable works but to help private
business evade taxes.
Moeharsono pointed out that some foundations, which deal with
education and health, make big profits paying a single rupiah in
taxes.
Bawazier said his office has already taken taxes from certain
foundations, including those running the first class hospitals on
Jl. H.R. Rasuna Said and Pondok Indah, both in South Jakarta.
He said the hospitals pay 100 percent of their property taxes,
as compared to the 50 percent paid by most other hospitals.(09)