Graft spirals out of control at tax office

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.