BOOSTING TAX REVENUE

Finance Minister, Bambang Brodjonegoro, said the target of tax revenue for 2014 amounted to IDR 1,072.38 trillion would not be achieved. But, he said the government continues to optimize revenue from the tax sector in cooperation with the Corruption Eradication Commission (KPK) and the Ministry of Energy and Mineral Resources.

Because to achieve the target, synergic cooperation is required with law enforcement apparatus, such as KPK, to purse tax evaders, particularly in the mining sector. Since early 2014, the government has intensified tax payment among lawyers, doctors, members of Parliament, and artists.

The policy was adopted to provide a sense of fairness to obedient taxpayers. It is one of the focuses in the future. That is, the government through the Ministry of Finance will explore the leaks that occur in the mining sector through field research conducted by KPK.

Interestingly, whether the effort to increase tax revenue and replacement of the Director General of Taxation is related or not, for the first time, the Ministry of Finance will auction first echelon position. It is the implementation of Law No. 5/2014 on State Civil Apparatus.

According to the Secretary General of the Ministry of Finance, Kiagus Badaruddin, Article108 of the Law mentioned that the filling of the high-level and mid-level leaders in the ministry, secretariat of state institutions, non-structural institutions, and regional agencies is conducted openly and competitively among civil servants by taking into account the standards of competence, qualifications, rank, education and training, track record, and integrity, as well as other requirements that are needed in accordance with the provisions of the legislation.

Through auction mechanism, technical, behavioral, and leadership competence and performance records of candidate leaders will be known and assessed. The goal is to create competent and professional bureaucrats. In addition, it is also a form of transparency. This is because the public can judge that the selected candidate has the capability and integrity. Moreover, the position of the Director General of Taxation is very strategic. In the selection process there is also a public test phase. In addition to administrative test, there are medical tests and interviews by the selection committee.

The registration process will be announced on the official website of the Ministry of Finance. The announcement includes the registration requirements for the Director General of Taxation, starting from education to work experience. It is expected that the registering candidates have experience in taxation. The main requirement is S2 education and experience in the field of taxation.

After the administration process, it continues to the selection process by a committee internally and externally. Internally, there is Deputy Minister of Finance as chairman and secretary General of the Ministry of Finance as vice chairman. Auction is only open to both civil servants from the Ministry of Finance and other ministries. The auction of office position is done in line with the term of office of the Director General of Taxation, Fuad Rahmany, which will end on December 1.

Hopefully, the elected figure, in addition to meeting the requirements, is mainly expected to have the ability to increase tax revenue, where one of the main indicators is increase in tax ration. Let the new Director General of Taxation think about this.

The Ministry of Finance hopes that strengthening of tax compliance to increase tax revenues in 2015 can be realized. One way is by improving access to transaction through cooperation with local governments. Car and home transactions, especially those which are quite expensive, will be done through Taxpayer Identification Number (NPWP). In this way, taxpayer compliance will be monitored.

Tax compliance will be improved on Corporate Income Tax, Individual Income Tax, and personal taxes. All will be explored whether it matches with the tax paid. Along with that, improvement of taxation system will be done, in the sense that invoice model should not be made by anyone. But, invoice could only be issued by the Directorate General of Taxation. So there will be electronic so that tax revenue target will be achieved.

It is admitted that these measures have been approved and encouraged by President Joko Widodo. Therefore, the Ministry of Finance has expressed the intention to the intention to the public. Efforts to raise the level of tax compliance is in connection with efforts to achieve target of tax revenue of IDR 1,400 trillion in 2015.

From the revenue side, the major source of revenue with greater role is tax revenue. Economic growth potential in the country is very large in comparison to other developing countries, although in the third quarter of 2014 slowed of grew 5.01 percent. However, with the economic growth potential, the ration of tax revenue to Gross Domestic Product (GDP) is still moving at the level of 11-12 percent.

For own personal income tax, the Ministry of Finance will further explore because for many individual taxpayers (WPOP), the total assets owned by them did not match with the tax paid each year. As Value Added Tax (VAT), the government will improve the system from manual invoice model to electronic invoice to minimize fraud.

And, the Ministry of Finance will also establish coordination and consolidation with the Indonesian Police and the Attorney General related to law enforcement because there was concern of the officers of the Directorate General of Taxation and the Customs & Excise in performing their duties. According to him, tax officials and customs & excise officials are also law enforcers.

The difference is that the police and prosecutors are associated to general crimes, while the tax and customs & excise authorities are related to the financial sector, for example smuggling, excise counterfeiting, or incorrect tax payments. So, law enforcement must be clear.

Minister of Finance, Bambang, said that currently tax and customs & excise officials did not want to take risk to perform law enforcement if there is a possibility of being criminalized by other law enforcers. It is necessary to build a mutual understanding among law enforcers, because they work together for the interests of the nation.

There is also another opinion that proposes the establishment of the Directorate General of Taxation in the current position, where its role only needs to be strengthened with a large portion. The Directorate General of Taxation needs flexibility making it more freely to determine the direction of acceptance in accordance with the targets to be achieved, without being limited by the position of the Directorate General of Taxation as part of the Ministry of Finance. So, the best scheme is to remain as a directorate general, but should be strengthened and given a large portion.

The idea of separating the Directorate General of taxation from the Ministry of Finance needs special attention from the New government in an effort to increase tax revenues. It is hoped the current administration could be more realistic in maximizing the role of the Directorate General of Taxation. With this opinion, it is expected that the independence and authority of the Directorate General of Taxation will be optimized so that efforts to boost tax revenues vis-à-vis increase in tax ratio will be realized. Many taxpayers are considered potential, whether institutions, corporations and individuals that have not been explored optimally. This should be targeted by the Directorate General of Taxation to be able to achieve the target. (E) 

Business News - November 19, 2014