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