Ministry of Finance reshuffles tax office

Ministry of Finance reshuffles tax office

The Jakarta Post, Jakarta

The Ministry of Finance has embarked on a major reshuffle in
the Directorate General of Taxation in a bid to improve the
public image of the tax office.

Minister of Finance Boediono on Wednesday installed 29 new
senior officials, mostly consisting of new heads of tax offices
in various provinces.

The minister, however, retained Hadi Purnomo as the Director
General of Taxation despite earlier reports that the two had been
at odds over the future of the tax office.

"We hope the new officials will be able to improve the public
image (of the tax office), and carry out their jobs well,"
Boediono said in a speech.

The tax office is regarded as being among the most corrupt
state institutions in the country. A top official at the ministry
had also earlier complained about the ministry's limited powers
to supervise the tax office.

The tax office has been under pressure to boost tax revenue,
which has become the main source of financing for the state
budget amid a declining dependency on foreign loans.

This year, the tax revenue target is set at Rp 260.2 trillion
(US$30.59 billion), or the equivalent of around 13 percent of
gross domestic product (GDP).

Meanwhile, Hadi said that during the first quarter of this
year, his office had collected around Rp 51.5 trillion in tax
revenues -- a 15.1 percent increase over the same quarter last
year.

He said that the higher revenue was mainly linked to improved
compliance after the tax office threatened to send tax evaders to
jail without trial.

So far, two businessmen have been put behind bars without
trial for alleged tax evasion.

First quarter tax revenue consists of Rp 27.5 trillion in non-
oil and gas income tax, oil and gas tax of Rp 4.4 trillion, value
added tax of Rp 17.2 trillion, land and building tax of Rp 1.9
trillion, and other taxes amounting to around Rp 380 billion.

Elsewhere, Hadi said that the government had proposed to
increase the tax threshold to Rp 12 million from the current Rp
2.8 million level.

The proposal was contained in the new taxation bill.