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.