Most of political elite evade tax payments: Government

MANADO, North Sulawesi (JP): Over half of the country's legislators, many ministers, generals and other high-ranking government officials were evading tax payments, Director General of Tax Machfud Sidik said.

Machfud said that many members of the country's political elite received incomes outside their taxed salaries, which they did not declare to his office.

"Don't just look at the ordinary citizens, even the members of our political elite don't fulfill their tax obligations," he told reporters over the weekend.

He said that this situation showed the lack of a sense of civic obligation among the public.

"Given these conditions, it will be difficult to reach our tax revenue targets," Machfud said.

He added that raising the public's awareness of civic obligations required long-term educational programs similar to those involved in raising the public's awareness of environmental issues.

On the other hand, Machfud said, the government must improve the quality of its public services, otherwise people would never truly understand the benefits of their tax payments, and hence would keep evading them.

"They (the people) are already accustomed to paying officials to do work for which they are also being paid by the government," he said.

Taxpayers, he said, demanded that they be served properly without having to fork out unofficial fees.

"Raising tax awareness and improving public service quality go hand in hand," he added.

At present, he said, out of approximately 20 million potential private taxpayers, only 1.3 million were registered with his office.

Even then, he said, some 40 percent of the 1.3 million, or about 520,000 taxpayers, were fictional since their names and addresses somehow did not match up.

"And not even all of the remaining taxpayers, who are categorized as compliant, pay their taxes in full," he added.

Machfud said he expected to increase the number of registered taxpayers by three times within the next five years to about four million.

According to him, the number of registered taxpayers has grown by only 60 percent from around 800,000 people over the past 10 years.

Machfud said the government and the House of Representatives planned to draft a law on tax amnesty, which aimed at encouraging current tax evaders to register their real income with the tax office.

"I am targeting 20 million potential tax payers with this law," he said.

He said the law would offer current tax evaders a cut in their unpaid taxes, if they report their real income to his office and henceforth honestly meet their tax obligations.

The law, he said, would overlook the origin of a tax payers' wealth, thus encouraging hose involved in corrupt practices to submit true returns without fearing prosecution.

He said that under the planned law, tax officials would be obliged to keep the identities of such private tax payers confidential.

"This is a delicate issue and will invite much political interference," Machfud predicted.

Plans for a tax amnesty for private tax payers were initially included in an article of the tax law amendment bills, which the House of Representatives recently approved.

But the House withdrew the article, proposing the drafting of separate legislation on the matter.

Machfud said people might misinterpret the law as a scheme to forgive corruptors.

"Ask God for forgiveness. Being realistic, we just want their money," he said.

According to him, the country is not even capable of solving a single high-class corruption case through legal means, much less prosecuting major corruptors and recovering illicitly acquired state funds.

He said that the law primarily aimed at expanding the tax base to include ordinary citizens who have so far evaded their tax obligations. (bkm)