Provinces told to be 'unaggressive' in collecting tax

JAKARTA (JP): Director general of taxation Mahfud Sidik warned provincial and district administrations on Tuesday not to be over zealous in collecting tax revenue once the regional autonomy policy is implemented next year.

Mahfud said an aggressive tax policy would only create too much burden to the people and deter both local and foreign investments.

"The regional autonomy will push regions to be more creative in taking advantage of their potential to raise revenue, but please don't be over zealous because it will only create more burden for the people," he told reporters following a seminar on tax in Surabaya.

He said that provinces or districts, particularly those lacking natural resources, could resort to other means of raising revenue like cutting down on the bureaucratic red tape to attract more investments.

Mahfud also said that the regional governments should not only focus on collecting tax but must also improve the quality of their bureaucratic service to the public.

The regional autonomy policy is scheduled to be implemented early next year. The measure includes a fiscal decentralization policy allowing provincial or district administrations to design their own fiscal policy including tax.

Asked about the possibility of multiple taxation by the central and regional governments, Mahfud said that in the long run multiple taxation must be fully eliminated.

He also said that in more developed nations, such multiple taxation rarely occurred.

Meanwhile, Finance Minister Bambang Sudibyo said that the government was preparing a set of rulings to support the implementation of the fiscal decentralization policy.

"The fiscal decentralization must be implemented at the latest by January 2001. The supporting regulation must be immediately completed and can't be delayed," Bambang said.

"If there's a delay even just for a year, it will create huge problems," he added, but didn't provide further explanation.

Bambang, however, has repeatedly said that the implementation of the regional autonomy policy was crucial in maintaining the unity of the country.

He said that even with a small sign of a delay from the central government, the regional governments would be deeply disappointed and would no longer trust the central government.

He said if such a scenario happened, the country might have to deal with serious insurgents in various provinces and districts. (rei)