Offer on tax incentive unfair

Offer on tax incentive unfair

According to point K, article 1, chapter 4 of Law No. 10/1994
on Income Tax, income originating from written-off debts is
subject to income tax with a rate of 30 percent.

Recently, Director General of Taxes A. Anshari Ritonga said at
a seminar that the government would exempt tax on income
originating from the debts written off by domestic banks or
overseas creditors.

The foreign debts of Indonesia's private sector companies have
reached about US$80 billion, while the bad loans at domestic
banks are estimated at Rp 150 trillion (US$17 billion). Those
enjoying the loans are conglomerate owners who have improperly
wasted the loans for unproductive purposes, leading to the
current economic and monetary crisis, which, in turn, caused
heavy burdens on the majority of the Indonesian people. Some of
the owners have allegedly transferred the funds to other
countries for investment or deposited them in banks.

There raises a question: Will the people who have personally
enjoyed great benefits be offered a tax facility in the form of
tax exemption?

I think this is unfair if we consider the interests of the
whole Indonesian people. The planned tax exemption will benefit
only a small group of rich people, who used to be the cronies of
former president Soeharto. I don't believe that those people have
become poor. They still have personal (not corporate) assets in
Indonesia. Actually, the government could confiscate their assets
for the payment of written-off debts.

Furthermore, the government may not violate the law. If it
wants to drop point K, article 1, chapter 4 of Law No. 10/1994 on
Income Tax, it must do it constitutionally by submitting a new
draft bill to the House of Representatives as required by article
2, chapter 23 of the Constitution of 1945. House members must be
alert and careful in deliberating the bill because they will have
to be fair to the people.

It is worth noting that there are many regulations under the
existing tax laws, which are unfair and authoritarian, creating
double taxation and reducing the rights of taxpayers.

SUHARSONO HADIKUSUMO

Jakarta