GOVT RESOLVED TO MEET TAX REVENUE TARGET

By Andi Abdussalam

Jakarta, Nov 25 (Antara) -- In the last decade, the Indonesian government always failed to achieve its tax revenue targets, except for in 2004 and 2008, and it is unlikely to be able to do so this year as well.          Of the Rp1,246.1 trillion tax target set in the revised 2014 state budget, only some Rp812 trillion has been collected till mid-November, which is about 65 percent of the amount. Also, the annual growth trend of the government's tax target is only 10 to 20 percent.          The realization of its tax receipts has always been less than the target set in the state budget. Given this fact, the government is resolved to achieve its tax target for 2015, which is projected at Rp1,370.8 trillion.          According to Finance Minister Bambang Brodjonegoro, the government will put in all efforts to boost tax revenues to Rp1,400 trillion in 2015.         "Certain factors must be improved to reinforce the directorate general of taxation. We will see whether it can be done next year," the finance minister said on Friday.          He stated that a measure that could be taken is increasing the number of tax officers because so far, a shortage of these officials has hampered the efforts to optimize tax collection.         Increasing the number of officials, however, is difficult to accomplish. "We can increase the number of officers by 5,000 to 10,000, but it is not easy to recruit qualified personnel who possess the required level of auditing skills," he added.          Besides that, funds should also be increased for tax activity operations, such as the use of information technology, data-based expansion, legal improvement to overcome transfer pricing, and the settlement of taxpayers' legal violations.          "We will try to earn high tax revenues as planned in the state budget while looking into the existing conditions. After all, law enforcement is not something that can be predicted precisely," the minister noted.          Moreover, tax observer Darussalam stressed the importance of the need for the government to carry out structural reforms in the taxation sector if it wanted to meet its tax target.          He added on Monday that the government needed to implement at least three phases of tax reforms, including tax institutional reform, tax administration reform, and tax regulation reform.          The observer argued that it was impossible for the government to increase its tax revenues by Rp600 trillion in 2015 without bringing about structural reforms in factors that have hampered the growth of tax revenue so far.          "One cannot hope for a drastic increase in tax receipts if the government does not carry out reforms in the three sectors.  Currently, a year-on-year comparison shows a growth trend of tax collection of only some 10 to 20 percent. So it is impossible for the government to increase its tax revenue by Rp600 trillion, or an increase by about 50 percent, without structural reforms," Darussalam explained.         He further noted that ideally, the structural tax reforms should be followed by tax intensification steps aimed at boosting the expansion of tax-resource bases that would increase the number of personal and company taxpayers.         Furthermore, the finance minister admitted that one of the weak points in tax collection was the collection of tax from non-employee personal taxpayers from whom only Rp4 trillion could be collected so far.          "The tax revenues still do not cover the expenditure needs. I hope that together we can improve the tax structure of personal taxpayers because it is our common responsibility to reduce debts," Brodjonegoro remarked.          On the contrary, Darussalam suggested that for the time being, the new director general of tax affairs who will be selected through a public and open recruitment system should not be burdened with a high tax target because conducting reforms in the three sectors will need two years.         "This is for the sake of laying down a strong taxation foundation. In the two-year period, tax revenue will continue to grow but not significantly. A significant growth can be expected after the reforms begin to function. In this case, we should not think about just short-term benefits," he stated.          Another tax observer, Ronny Bako of the University of Pelita Harapan (UPH), is of the same opinion.  He said that it would be illogical to set a high tax revenue target without any reforms and breakthroughs.          He added that the amount of tax collected so far was small because public participation in paying taxes was small. This is ironical as the country has rich tax-resource bases with the involvement of a large number of people.          "Of the country's 250 million people, some 50 percent earn adequate income and are obligated to pay taxes. However, only 30 million of them have registered, and of this number, only three million pay taxes regularly. So this needs a special policy or step for handling," Bako remarked.          He further noted that so far, the Indonesian taxation system was weak in identifying its taxpayers. The government should design a simple system to allow people with taxpayer numbers to pay their tax online.          Bako pointed out that one of the steps that could be taken to tap the country's tax potentials was to impose a tax amnesty. This does not mean abolishing taxpayers' arrears but reducing them by obliging violators to only pay a certain percentage of the arrears.         He is convinced that this system will increase the number of regular taxpayers, which will, in turn, increase the value of tax revenue significantly in the coming years.         "After implementing the tax amnesty, tax dodgers can be taken to court directly for not paying their taxes regularly," he added.          According to the finance minister, with increased efforts, high taxpayers can be made more compliant and new bases for tax resources can be created. As a result, the government will not face significant difficulties in identifying potential tax sources and achieving state budget targets.          So the government is resolved and is convinced that it can achieve its tax target in 2015.         "The rate of compliance of taxpayers is currently only some 20 percent. This indicates that there are a lot of areas with potential to be exploited," Brodjonegoro noted.     ***2*** (T.A014/INE) EDITED BY INE (T.A014/A/BESSR/A. Abdussalam) 25-11-2014 21:35: