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

They thus urged the government to stage a careful selection to
ensure that only credible officials be placed in the so-named
Large Taxpayers Office (LTO).

"The LTO is an inspiring breakthrough to boost the
government's tax revenue. But, for sure 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 dispute between taxpayers and tax official,
particularly over "gray areas".

The "gray area" refers to expenditures which often raise
different interpretations among taxpayers and tax officials. The
expenditures include traveling and entertainment expenses.

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

Sofyan also called for the establishment of an ombudsman,
comprising independent people, to supervise the LTO as well as to
mediate in the 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 the supervision of the LTO by
the Tax Directorate would be enough.

Economist Faisal Basri praised that the LTO could become a
model of professional tax office ran by accountable and morally-
good staff.

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

Faisal also agreed that an independent body, outside the
Directorate of Tax and the Ministry of Finance, whether it will
be called ombudsman or not, should be set up to supervise the LTO
and guarantee that it would not be tainted with corruption and
collusion.

Faisal thanked the IMF for the establishment of the LTO.

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

Economist Pande Raja Silalahi also gave a thumb-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 collection of taxes from large taxpayers in
the LTO, it would be easier for the government or any agency
assigned to supervise the LTO to detect the irregularities in the
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 could become a transitional system which
could lead to the development of a better and cleaner tax service
in the country.