Indonesia: Tax appointment crucial to reform drive
JAKARTA (Reuters) - Indonesia's tax chief, Darmin Nasution, who is credited with cleaning up the notoriously corrupt department and boosting tax revenues, moves to the central bank this month to become a senior deputy governor.
Since he was so closely associated with driving the changes, analysts said his departure could mean the reform will stall or backslide unless he is replaced with someone of equal stature.
Here are some questions and answers regarding tax policy:
WHY IS REFORM OF THE TAX DEPARTMENT IMPORTANT?
Widespread corruption has long tainted Indonesia's reputation and lax tax collection has limited government revenues.
Less than half of registered tax payers pay tax in the country of 226 million people.
The number of tax-registered companies and individuals rose to 14.08 million in May 2009 from just 4.35 million in 2005, the first full year of President Susilo Bambang Yudhoyono's term.
Tax revenues, including from customs and excise, have increased but not in comparison with the size of the economy.
The tax-to-GDP ratio has remained relatively stable at around 13-14 percent since 2002. Economists say it should be closer to 20 percent in line with international norms.
Getting more Indonesians to pay taxes is a struggle, partly because few feel they get tangible benefits from roads and other infrastructure, or public services, such as health care.
WHO WILL TAKE OVER?
Several names have come up. Candidates from within the tax department include compliance director Sumihar Petrus Tambunan; tax regulation director Sjarifuddin Alsah; and head of the West Jakarta Regional Office, Amri Zaman.
Other contenders are outsiders, including Fuad Rahmany, head of market regulator Bapepam and Anny Ratnawati, director-general for budget management at the finance ministry.
Tambunan: Generally keeps a low profile and is considered competent. He has been closely involved in the department's reforms so far, so analysts see him as a trusted successor to Nasution. But he has not held such a senior position before so is untested in a high-profile leadership role.
Alsah: A former head of the South Jakarta Regional Office of the tax department who moved to head office during Nasution's term. He is known as a capable official who has held a number of senior positions within the tax department, giving him sufficient experience for the top job. He has strong political connections, although analysts say that can be seen as both a positive and a negative. The connections give him access to top decision-makers, but also may expose him to political pressures.
Zaman: When Nasution became tax director-general, he made several changes in the upper ranks, including moving Zaman from the post of collection director based in head office to the West Jakarta Regional Office.
Rahmany: He is head of market regulator Bapepam. A firm official, he has had success in enforcing stock market regulations. But the regulator has faced political opposition in trying to deal with politically connected firms.
Ratnawati: She is director-general for budget management at the finance ministry and was a member of the presidential campaign team that secured victory in the last election.
Since he was so closely associated with driving the changes, analysts said his departure could mean the reform will stall or backslide unless he is replaced with someone of equal stature.
Here are some questions and answers regarding tax policy:
WHY IS REFORM OF THE TAX DEPARTMENT IMPORTANT?
Widespread corruption has long tainted Indonesia's reputation and lax tax collection has limited government revenues.
Less than half of registered tax payers pay tax in the country of 226 million people.
The number of tax-registered companies and individuals rose to 14.08 million in May 2009 from just 4.35 million in 2005, the first full year of President Susilo Bambang Yudhoyono's term.
Tax revenues, including from customs and excise, have increased but not in comparison with the size of the economy.
The tax-to-GDP ratio has remained relatively stable at around 13-14 percent since 2002. Economists say it should be closer to 20 percent in line with international norms.
Getting more Indonesians to pay taxes is a struggle, partly because few feel they get tangible benefits from roads and other infrastructure, or public services, such as health care.
WHO WILL TAKE OVER?
Several names have come up. Candidates from within the tax department include compliance director Sumihar Petrus Tambunan; tax regulation director Sjarifuddin Alsah; and head of the West Jakarta Regional Office, Amri Zaman.
Other contenders are outsiders, including Fuad Rahmany, head of market regulator Bapepam and Anny Ratnawati, director-general for budget management at the finance ministry.
Tambunan: Generally keeps a low profile and is considered competent. He has been closely involved in the department's reforms so far, so analysts see him as a trusted successor to Nasution. But he has not held such a senior position before so is untested in a high-profile leadership role.
Alsah: A former head of the South Jakarta Regional Office of the tax department who moved to head office during Nasution's term. He is known as a capable official who has held a number of senior positions within the tax department, giving him sufficient experience for the top job. He has strong political connections, although analysts say that can be seen as both a positive and a negative. The connections give him access to top decision-makers, but also may expose him to political pressures.
Zaman: When Nasution became tax director-general, he made several changes in the upper ranks, including moving Zaman from the post of collection director based in head office to the West Jakarta Regional Office.
Rahmany: He is head of market regulator Bapepam. A firm official, he has had success in enforcing stock market regulations. But the regulator has faced political opposition in trying to deal with politically connected firms.
Ratnawati: She is director-general for budget management at the finance ministry and was a member of the presidential campaign team that secured victory in the last election.