President tells tax officials to improve performance

Muninggar Sri Saraswati and Rendi A. Witular, The Jakarta Post, Jakarta

The President has expressed his disappointment over the performance of the tax office, notably red tape, which is prone to abuse and forces taxpayers to explore illegal avenues.

"The mentality of the bureaucrats responsible for making procedures excessively complicated should be abandoned," said President Susilo Bambang Yudhoyono during a gathering with taxpayers on Monday, following the launch of an electronic tax filing system.

"The public just want to fulfill their obligations, but tax officials often make that hard to do. Such a mentality has created a wide gap, in terms of the relations between the government and the public," he said.

Susilo's remarks follow complaints from the business community over the fact that being honest in paying taxes does not ensure they receive honest or professional service from the tax office, as tax officials have often tried to extort them.

In some cases, tax officials have offered their services to collude with taxpayers in order to manipulate the amount of taxes paid to the state, with the tax officials later receiving a commission from the taxpayer.

Director General of Taxation Hadi Purnomo said his office was hopeful that corrupt practices could be reduced, betting on the newly established electronic facility for tax filing as it would limit the interaction between tax officials and taxpayers.

"Limitation in the interaction between the two parties will also reduce chances for collusion and corruption. Thus, we are optimistic that the facility can help prevent corruption," said Hadi.

The new facility will allow taxpayers to report their tax assessment online without having to go to the tax office.

However, a noted businessman who attended the launch said such a system would be useless in preventing corruption as there was still room for tax officials to interact with taxpayers.

"This is just a facility provided by the tax officials to show that they are serious in fighting corruption. But in reality, it will not sufficiently function to reduce any graft," said the businessman.

The businessman said interaction would occur if the tax officials attempted to collude with taxpayers through seeking and identifying unnecessary errors in the tax assessment and meeting with them to "revise" the errors.

At this point, the tax official could offer their services to the taxpayer.

Another possible method would be the intentional inflation of the amount of tax owed by taxpayers by the tax officials, in order for them to file a complaint with the tax tribunal. For the complaint to be heard, the taxpayer would have to pay 50 percent of their tax arrears, the businessman added.

Given the huge costs and long process involved, taxpayers are usually reluctant to file their assessments, and those who are unable to meet the 50 percent arrears payment have no alternative but to seek a compromise with tax officials.

Based on the prevailing laws and regulations, taxpayers can only report errors or irregularities in their tax invoice to the tribunal, which, like the tax office, is under the Ministry of Finance.