Graft spirals out of control at tax office

Rendi A. Witular, The Jakarta Post/Jakarta

Few people could afford to buy the latest BMW 5 car at the age of 27, no matter how hard they work. But, Amien, not his real name, can buy one easily. He's a public official in one of the country's most corrupt institutions: the tax office.

Officially, Amien, who has been employed as a Jakarta tax official for the past six years since graduating from the state- run accounting academy STAN, receives a monthly take-home salary of about Rp 3 million (about US$328). But he can easily make an additional Rp 500 million per year without even working for it.

Amien's murky methods of making money involves either colluding with taxpayers, or blackmailing them.

Amien refused to elaborate, but according to Ade Sudradjat, an executive at the Indonesian Textile Association (API), since 1998 tax officials have preferred to use the tax tribunal as a tool to extort taxpayers.

Ade said that tax officials intentionally inflated the amount of taxes owed by taxpayers in order to push them to file a complaint with the tax tribunal. But, under the existing regulations, they cannot file their complaint unless they have paid 50 percent of the inflated arrears.

"Given the huge cost of going the tribunal, taxpayers are thus usually reluctant to take their cases there, and those who are unable to make the 50 percent arrears payment have no alternative but to seek a compromise with tax officials by paying bribes," he said.

Based on existing law and regulations, taxpayers can only file complaints about errors or irregularities in their tax bills to the tribunal, which, like the tax office, is under the Ministry of Finance.

Ade and Amien said going to the tribunal was pointless. They could not give cases a fair hearing because the administration, salaries, rotations and promotions of judges is handled by the ministry.

"With the current system, my advice to you is to pay the bribes. There is no use filing complaints as even if you win, you will not get your 50 percent advance payment back easily. It may take years," said Amien.

Tax officials' other method of making illegal money is by lowering the amount of taxes to be paid by taxpayers in return for a fee.

Ade said that this method was widely used by tax officials in the 1980s and 1990s, and remains a common practice for some tax officials even now.

A noted businessman, who asked for anonymity, recalled that tax officials once demanded bribes when he asked for his tax refunds. Unless he paid the bribes, the tax officials threatened to hold up his tax refunds for years.

"It's was a bad experience. These people held money that I badly needed to finance my business operations," the businessman said.

According to Amien, illegally-collected funds are normally distributed within the tax office with the tax collector getting 25 percent, his or her coordinator 15 percent, the section head 25 percent and the tax office head 30 percent.

The tax office head would later distribute the money to the higher-ranking officials, including the Directorate General of Taxation's top officials.

"There are only two options for tax office officials: you either join the club of corruptors and get rich, or you stay honest and spend your entire career as a clerk in the tax office's library. I chose the first option," said Amien.