Tax officials feel heat over graft charges

Urip Hudiono and Zakki P. Hakim, The Jakarta Post, Jakarta

Apparently irritated by recent reports highlighting the grotesque corruption within the directorates under his control, the finance minister has ordered the directors general dealing with taxation and customs and excise to sign an antigraft pledge.

The "political contract" makes it clear that they must resign if they are unable to stamp out corruption in their offices and meet other obligations.

"It will be signed as soon as possible ... perhaps next week, at the latest," Minister of Finance Yusuf Anwar told reporters on Friday.

Yusuf explained that the political contract -- as he termed it -- would include a complete assessment of the capabilities of the directors general to institute discipline and integrity down to the lowest-ranking tax officer or customs clerk, and fulfill their revenue targets for the state budget.

"But the most crucial assessment point will be on how they can eradicate corruption and collusion," he asserted.

"If they do not perform according to the contract within three months, then they will have to resign."

Yusuf added that he would also order the ministry's other directors general and inspectors general to sign a similar contract, but said the two directorate chiefs would be the priority for the time being.

Those two directorates are widely believed to be the country's most corrupt institutions, and most damaging, as they result in state losses of trillions of rupiah every year, at a time when the government is counting on their revenue to help finance the state budget.

The government is expecting Rp 238.5 trillion (US$26.5 billion) in tax revenue and Rp 40.9 trillion in combined customs and excise revenue -- which represents more than 80 percent of total revenue in the state budget.

Chairman of the Corruption Eradication Commission (KPK) Taufiqurrahman Ruki recently warned the Directorate General of Taxation Hadi Purnomo to stamp out corruption within three months, or the KPK would formally begin a criminal investigation.

Hadi could not be contacted for comment on the minister's political contract, however, he had previously denied allegations of rampant corruption at the tax office, and claimed that he always took stern action against corrupt tax officers.

A recent investigation by The Jakarta Post, however, revealed that extortion by tax officers, especially with regard to the manipulation of the ministry's tax tribunal and tax refund procedures, remained rampant.

Meanwhile, Director General of Customs and Excise Eddy Abdurachman said that he was ready to sign such a contract and carry out its requirements.

"The contract is an order from the minister, so I have to abide by it," he explained.

Eddy went on to say that he had actually implemented various internal systems since 2002 to curb smuggling and limit corruption.

Eddy's claims were backed up by some industry players, who praised the directorate's recent actions in tightening inspection at ports, which apparently have had an affect on the trafficking of illegal goods into the country.

Indonesian Chamber of Commerce and Industry vice chairman Rachmat Gobel revealed that immediately after President Susilo Bambang Yudhoyono took office in October and declared smuggling a top priority to be taken care of, illegally imported goods piled up in ports.

"This is a good example that we can stop rampant smuggling if we have the will," said Rachmat.

Separately, Indonesian Electric Lighting Industry Association chairman John Manoppo hoped the directorate general maintained that level of performance beyond the administration's first 100- day period.

According to John, since October the customs office had seized 10 containers of sub-standard, imported lamps in ports in Jakarta, Medan and Surabaya.

"It is a good thing that the customs office is tightening its control, but will it stay consistent after the 100-day honeymoon is over?" he asked.