Minister says not feasible to relax banking secrecy

Minister says not feasible to relax banking secrecy

The Jakarta Post, Jakarta

A proposal from legislators to relax existing regulations on
banking secrecy principles -- while worthy of consideration -- is
seen as unfeasible for immediate implementation, Minister of
Finance Boediono said on Wednesday.

"It (the proposal) is still a discourse, a thought. We'll see
how we can accommodate that at the right time, but not at the
moment.

"We'll look into it more closely later on," Boediono told
reporters.

He was commenting on a recommendation made by the House of
Representatives' budget commission to provide the tax office with
greater access to the bank accounts of tax payers to check for
the validity of their actual wealth, which in turn should help
increase tax revenue collection. According to some lawmakers,
certain tax payers might have under valued the true size of their
wealth to avoid paying tax.

The country's banking law stipulates that the liability side
(deposits) of a bank is protected by the secrecy code. Only in
certain cases can details of a account be disclosed. For
instance, in a corruption case where a suspect has been named,
then the Attorney General's Office or the Supreme Court can
request disclosure.

Taking this into consideration, the lawmakers have recommended
the easing of the banking secrecy ruling, although they left it
to the government to determine what ruling to relax.

The legislators argued the recommendation was needed after
learning that this year's tax collection target had to be revised
downward to accommodate the shortfalls.

However, Boediono was of the opinion that the proposal would
only put in jeopardy the hard-gained public confidence in the
banking sector, something that might prompt another round of
capital outflows.

Supporting Boediono's statement, Directorate General for
Taxation Hadi Purnomo also objected to the proposal, saying an
amendment to the existing banking law must be done first before
the proposal can be applicable.

The House's recommendation came following claims by the
government that the tax revenue target could not be met, due
partly to the estimated shortfall in non-oil and gas income tax.

Tax revenues are expected to reach Rp 248.5 trillion in total
this year, falling short of the initial target of Rp 254.1
trillion, with the non-oil and gas income tax target falling from
Rp 106.1 trillion to Rp 104.3 trillion.