Thumb-up given to new tax office

Rendi A. Witular, The Jakarta Post, Jakarta

Businessmen and experts praised on Wednesday the establishment of a special office to collect taxes from the country's largest taxpayers, but warned that the new office could become another corrupt institution like other tax offices in the country unless it is managed by clean officials.

They urged the government to carefully select personnel to ensure that only credible officials were placed in the office to be known as the Large Taxpayers Office (LTO).

"The LTO is an inspiring breakthrough to boost the government's tax revenue. But, certainly it must be filled with credible staff and leaders.

"However good a system is, it will not work if the man behind the wheel is ill-suited," said businessman Sofyan Wanandi, who is also chairman of the National Economic Recovery Committee (KPEN).

The LTO is now in the final phase of establishment and will be launched next month. It will collect taxes from the country's 200 top businesses in terms of sales, which account for 23 percent of the government's tax earnings.

The establishment of the LTO is part of an agreement with the International Monetary Fund (IMF) as part of the efforts to boost the country's tax revenue.

Sofyan emphasized that the LTO should promote transparency to prevent tax disputes between taxpayers and tax officials, particularly in "gray areas".

The gray area refers to expenditure that is often interpreted differently by taxpayers and tax officials. The expenditure includes traveling and entertainment expenses.

"The gray area has often created the opportunity for collusion and extortion by tax officials. For sure, large taxpayers won't cheat on their tax obligation as it could hurt their reputation," said Sofyan.

Sofyan also called for the establishment of an ombudsmen's office, comprising independent people, to supervise the LTO as well as to mediate in disputes between taxpayers and tax officials before the cases are brought to the tax court.

Petronius Saragih, the coordinator of the LTO project, earlier rejected the ombudsman idea, saying that the LTO need only be supervised by the Directorate General of Tax.

Economist Faisal Basri said that the LTO could become a model of a professional tax office ran by accountable and moral staff.

"I'm, at least, optimistic the LTO could pave the way toward the creation of an accountable and transparent tax service," said Faisal.

Faisal also agreed that an independent body, outside the Directorate General of Tax and the Ministry of Finance, whether it will be called an ombudsmen's office or not, should be set up to supervise the LTO and ensure that it is not be tainted by corruption and collusion.

Faisal thanked the IMF for the establishment of the LTO.

"It's funny that our country's tax office reform program has come from outsiders. Had it not been for the IMF, I believe, the government would not have made the reform program," said Faisal.

Economist Pande Raja Silalahi also gave the thumbs-up to the formation of the LTO.

"This is a logical step to prevent taxpayers from evading their tax obligation by conspiring with tax officials," said Pande.

By centralizing the collection of taxes from large taxpayers at the LTO, it would be easier for the government or any agency assigned to supervise the LTO to detect irregularities in tax collection, according to Pande. Like Faisal and Sofyan, Pande also called for the formation of an independent body to supervise the LTO.

Pande saw the LTO as a transitional system that could lead to the development of a better and cleaner tax service in the country.