LTO staffs to get handsome salary and fringe benefits

Rendi A. Witular, The Jakarta Post, Jakarta

Tax officials working at the newly-established Large Taxpayers' Office (LTO) will get a very handsome salary, which could cause envy among other government employees.

A source at the personnel development division of the finance ministry who asked for anonymity told The Jakarta Post that the tax officials at the special tax office would get "fringe benefits" 20 times higher than those obtained by their colleagues at the directorate general of tax.

He said that the higher salary was meant to prevent corrupt and collusive practices at the LTO. He added that a finance ministry decree on the matter had been issued.

The LTO was officially launched on Monday with a mission to collect taxes from the country's top 200 businesses, many of which had evaded tax obligations in the past causing massive losses to the state.

As the government is under pressure to collect a greater amount of tax revenue to help finance the state budget, the role of the LTO will be very crucial as the 200 largest businesses were expected to contribute 23 percent to total tax revenue this year of more than Rp 184 trillion.

With the size of fringe benefits for ordinary tax official set at Rp 420,000 per month, the figure for those working at the LTO would jumped 20 times to Rp 8.4 million. Including basic salary, an official at LTO would earn around Rp 10 million per month.

The finance ministry source said that the head of the LTO could take home some Rp 40 million per month.

In comparison, a fresh university graduate working at the finance ministry would only get Rp 1.3 million per month, while a senior official at the directorate general of tax would only take home some Rp 10 million each month.

Director General of Tax Hadi Poernomo declined to comment. "Bapak refuses to comment on the issue," said his secretary Wahyudi when contacted via phone.

But coordinator of the LTO project Petronius Saragih had recently confirmed that the salary of the LTO officials would be higher than those of the ordinary tax officials because the former would work extra hard to collect taxes from the large businesses, thus deserve to be given higher incentives.

Meanwhile, head of the House of Representatives Commission IX overseeing financial affairs Benny Pasaribu criticized the higher salary policy.

Benny, who claimed that he had already heard of such a policy, said that there was no guarantee that the LTO tax officials would be free from corrupt practices if the salary was raised.

"It is irrational to pay such huge benefit just to guarantee that they will be free from corruption and collusion. It won't assure that, the problem lays in their mentality which is so severely corrupt," said Benny.

He added that he would raise the issue at an upcoming hearing session with the finance ministry particularly at a time when the state budget was already under severe pressure from the costly bank bailout program.

It has been no secret that tax officials often engage in collusive practices with taxpayers particularly large ones.

The government has recently said that 30 out of the 200 largest corporate taxpayers failed to pay their taxes in the 2000 financial year of around Rp 8.2 trillion out of the total tax arrears of Rp 14.5 trillion during the year.

The higher salary of the LTO officials may only be matched by people working at the Indonesian Bank Restructuring Agency (IBRA), a special government agency set up in 1998 with a mission to restructure the country's ailing banking and corporate sectors. The agency has a four year mandate period.

Legislators have previously criticized the high salary of IBRA officials at a time when their performance was very disappointing with international donors criticizing the slow progress in asset sale program.