The biggest taxpayers

The biggest taxpayers

There are not many surprising entries to the list of
Indonesia's 200 biggest individual and corporate taxpayers for
1995, as announced by Tax Director General Fuad Bawazier Sunday.
Most of them, especially those in the top 100 taxpayers for both
categories, are familiar at least to the general public who
periodically peruse the business pages of newspapers. Many of the
names in the top individual taxpayer list are related to those
included in the corporate taxpayer list. The individuals are
either the owners or directors of the biggest corporate
taxpayers.

We know both the top individual and corporate taxpayers are
the largest in their respective categories but it is obviously
impossible to know how much tax they have paid because that is a
secret protected by law. Such details are known only to the tax
officers. But a rough indicator of the amount of taxes they paid
can be seen from the three tax brackets set by the income tax
law: 10 percent for an annual income of up to Rp 10 million
(US$4,230), 15 percent for an annual income of more than Rp 10
million up to Rp 50 million and 30 percent for an annual income
exceeding Rp 50 million.

The rankings of the top taxpayers for both categories
naturally fluctuate with the annual incomes earned. We should not
be easily misled to the wrong conclusions, let alone suspicions
of tax evasion or underpayment, whenever a taxpayer was sharply
downgraded in the list in a particular year. But income is not a
fixed variable for top-income earners. The income of companies'
owners or shareholders does not fluctuate according to the
profits of their businesses but mainly due to the dividends paid
out of their corporate profits. A company, for example, can rank
very high in the list of corporate taxpayers but its owners may
not be included in the top individual taxpayer list because the
shareholders decide to reinvest the bulk of the earnings.

But there are several outstanding trends worth noting in the
annual lists of top taxpayers. One of them is the persistent top
rankings gained by the two largest clove-cigarette makers-- PT
Gudang Garam and PT HM Sampoerna since 1991. This indicates both
high profit margins and steady increases gained by the cigarette
companies. No wonder the owners of the cigarette companies have
steadily topped the list of the biggest individual taxpayers. For
1995, five of the seven owners of Gudang Garam ranked from the
third to the seventh and two others ranked 22nd and 31st
respectively. The Sampoerna family has also persistently occupied
the top ranks. The Soedono Salim family who owns hundreds of
companies put only three of its members on the list -- in the
1st, 8th and 26th ranks respectively.

Another outstanding trend is the steady top ranking of the two
state-owned telecommunications companies-- Telkom and Satelindo.
Also highly noticeable is the increasing number of publicly-
listed companies in the list.

One may criticize the fact that the 200 biggest individual
taxpayers accounted for a mere 2.7 percent of the total
individual income tax receipts. Tax Director General Fuad
Bawazier admitted that his office received only 1.2 million
individual income tax returns in 1995, while the number of
registered individual taxpayers totaled more than 10 million.
This indicates the crucial role played by company employees who
do not file individual tax returns because their income tax is
directly withheld by their employers (companies) and is filed
together in the corporate tax returns.

Despite the extreme lack of details disclosed by the top
taxpayer lists, the annual rankings should be welcomed as part of
an educational process for the people to fulfill one of their
civic duties -- paying taxes. The government and analysts have
often conceded that the potential tax capacity in the country has
remained largely untapped and the ratio of income tax receipts
against the gross domestic product is the lowest among ASEAN
countries. We still have a long way to go in instilling a high
sense of tax compliance. But such an awareness could be enhanced
if taxpayers knew that their money was being spent for the
public's benefits and not wasted through inefficiency, corruption
and other forms of malfeasance.