Tax office comes under fire from antigraft commission

Tax office comes under fire from antigraft commission

Urip Hudiono
The Jakarta Post/Jakarta

Responding to reports of rampant corruption in the tax office,
the Corruption Eradication Commission (KPK) has lambasted the
finance ministry's Directorate General of Taxation, urging it to
crack down on the offenders, particularly tax officers who made
deals with and extorted taxpayers.

Indicating that it would closely monitor the directorate from
now on, the antigraft commission said that it would give the tax
office just three months to clean up its act, before it pushes
ahead with criminal investigations.

"We want to see results immediately -- not within a year or
so, but within three months," KPK chairman Taufiqurrahman Ruki
said on Tuesday, on the sidelines of a tax seminar held by the
ministry.

"If it turns out the problem stems from the tax officers' lack
of integrity, then the directorate has to take strong action
against its personnel."

Taufiqurrahman explained that the KPK had conducted a thorough
audit of the country's taxation system over the year, and found
at least nine loopholes in the system that were prone to acts of
corruption.

"We found that the most frequent acts of corruption were
backstreet deals between tax officers and taxpayers on the
payment of their taxes," he said.

Taxpayers would pay less in taxes and tax officers would
further extort taxpayers, jeopardizing the government's tax
revenue target of Rp 238.5 trillion (26.5 billion) for this
year's state budget, and Rp 256.9 trillion for next year.

It could also foil President Susilo Bambang Yudhoyono's recent
request that the tax office boost tax revenue to 19 percent of
the nation's gross domestic product by 2009, from the current
13.8 percent, by preventing leakages and enlarging the tax base.

The tax office, along with the finance ministry's customs and
excise directorate, is indeed widely known as the country's most
corrupt institution, resulting in state revenue losses of
trillions of rupiah.

The ministry's Inspectorate General, for example, found
irregularities totaling Rp 753 billion (US$83.6 million) and
$119,818 at the directorate in the first nine months of 2003
alone.

Besides the Inspectorate General, the National Ombudsman
Commission, the State Comptroller, the Supreme Audit Agency and
the ministry's newest Investigation Unit actually are tasked with
monitoring the tax office. But they are all virtually toothless
as they lack the authority to follow up taxpayers complaints over
corruption by tax officials.

The KPK itself, Taufiqurrahman said, would still let the
Ministry of Finance administer its own internal sanctions against
the directorate's officials, if they could not eradicate
corruption in the tax office.

Taufiqurrahman, however, said that KPK would be ready to
pursue criminal charges against any tax officer found to be
involved in corruption.

The KPK, established in January, has the authority to monitor
and prevent corruption practices across the country, and
investigate any state official accused of being involved in
corruption cases. It has so far investigated 11 graft cases, all
of them high profile cases.

KPK's attack was a big wet towel tossed upon the tax office's
celebration broadcast live on RCTI Tuesday to select its best
male and female tax messengers, known as Arjuna and Srikandi,
which resembled a beauty pageant more than a tax-collector's
award show.

Commenting on the KPK's criticism, Director General for
Taxation Hadi Purnomo said that his office has always tried to
improve its performance.

"We are constantly improving the morality and integrity of our
tax officers," he said. "We have also improved the transparency
and convenience of our services, including developing online
services, to prevent any opportunity for corruption."

Hadi also denied any leakages in tax revenue, pointing instead
to conflicting provisions in a number of regulations which have
restricted access to information on bank deposits, credit cards,
stock and foreign exchange transactions, and caused potential
losses of up to Rp 679 trillion (US$75 billion) in tax revenue.

Hadi also denied that his office only pursued tax crimes
committed by taxpayers, as it had also imposed sanctions on at
least 300 tax officers this year alone.