Weak supervision nurtures corruption at tax office
Rendi A. Witular, The Jakarta Post, Jakarta
The weak supervisory system of the tax office is seen as one of the main factors for corruption among tax officials, which results in massive state losses and a poor business environment.
A senior official at the Ministry of Finance who requested anonymity said the four institutions that supervise the tax office were toothless because their authority to investigate corruption was limited.
"In general, the four institutions have the same type of tasks. But due to the lack of regulations, they don't have the adequate authority to follow up complaints from taxpayers over corruption by tax officials," the official said.
Questions over the effectiveness of the supervision of the tax office arose after several businesspeople told The Jakarta Post recently that they had been extorted by tax officials.
Businessmen B.Q. Vega and Widodo Latip have joined together in suing the tax office in the Constitutional Court and the administrative court, and are planning to report the extortion to the police.
The Ministry of Finance's Inspectorate General, the National Ombudsman Commission (NOC), the State Comptroller (BPKP) and the Supreme Audit Agency (BPK) are meant to supervise the tax office.
Under current regulations, the BPKP and BPK only ensure the compliance of the tax office with tax regulations and its accountability in the use of state funds. The agencies do not have the authority to follow up on corruption reports from taxpayers.
The lead in combating corruption at the tax office is meant to come from the Inspectorate General and the NOC. However, the NOC is completely toothless because it lacks the authority to investigate any reports or complaints from taxpayers.
The chairman of the NOC, Antonius Sudjata, told the Post recently that based on its agreement it signed with the Ministry of Finance in mid-2002, the ombudsman commission could only forward taxpayers' complaints to the tax office, nothing more.
"Our task is to receive complaints from taxpayers and then send them to the tax office to be settled," said Antonius, adding that thus far the NOC had only received 18 complaints.
The Inspectorate General has more power than the NOC, as it can investigate reports of corruption from taxpayers and penalize those tax officials involved.
However, the office cannot function effectively because it does not have the authority to seek evidence of corruption from taxpayers who file complaints. The office can only investigate he accused tax officials, without being able to confirm the results of the investigation with the complainants.
The senior official from the finance ministry said that due to these limitations, the Inspectorate General planned to propose to the minister of finance that it be given wider authority, including the power to seek direct evidence from taxpayers.
The Ministry of Finance's Inspector General Agus Muhammad did not deny this plan.
Agus told the Post his agency had difficulty following up complaints from taxpayers as it was unable to collect facts directly from them without prior approval from the tax office.
"The Inspectorate General has received hundreds of complaints from taxpayers, however, we are not allowed to directly seek further evidence from them. We only receive one-sided evidence from the tax office concerning the complaints," said Agus.
The Inspectorate General found irregularities totaling Rp 753 billion (US$88.5 million) and $119,818 at the Directorate General of Taxation during the first nine months of 2003. In 2002, the office found irregularities totaling Rp 1.97 trillion and $3.83 million.
Director General of Taxation Hadi Purnomo earlier said the tax office, which is expected to collect Rp 216 trillion in taxes for the state budget this year, did not need a new system of supervision because the current supervisory agencies were adequate.