Mon, 26 Jan 2004

On draft tax law

The ministry of finance appreciates The Jakarta Post's articles on tax reform published on three consequtive days, Jan. 14, Jan. 15, and Jan. 16, and its editorial on Jan. 19, but feels that the tone and content do not accurately reflect either the process or substance under discussion.

The laws reviewed are currently undergoing internal review, which includes invited comments from experts from business community and academia. The version described in your articles is not the current version, but more importantly, as you indicate in your quote from Mr. Errata, the process is not final, in direct contradiction with your headline Government completes draconian draft tax law on Jan. 14, 2004.

As you note, this internal process will be completed by the end of the month and the amendment will be submitted to the House of Representatives for open discussion with stakeholders where the issues you raise can again be examined.

However, our greatest concern is with the tone of your article and editorial. We do not think it helpful to set up a dichotomy whereby you assume that tax officials characterize all tax payers as "potential cheats or tax evaders" (the Post, Jan. 19, 2004) and do not appreciate your characterization of tax officers as "unscrupulous tax officials" (the Post, Jan. 14, 2004). At the point we finish the amendment and submit it to the House we welcome constructive criticism and helpful suggestions on individual proposals.

Further, your characterization that the tax laws are far from what was promised by the minister misses the point that they are part of a larger package of tax reforms. Eliminating or reducing luxury taxes, exempting commodities or simplifying tax forms do not need to be done within the tax law. There will be an associated package of government and ministerial regulations to deal with these issues.

Finally, we do not believe that tax administration changes proposed are "draconian". Most proposed changes relate to penalties for late filing, requirements that books be held in Indonesia and criminal activity with respect to fake receipts.

ANGGITO ABIMANYU Agency for Fiscal Analysis Ministry of Finance Jakarta