Thumb-up given to new tax office

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.