The Indonesian Government is desperate to make up for revenue shortfalls in the state budget by boosting revenue in more “creative ways”. One of its most controversial plans to do that is to offer a tax amnesty to Indonesians that have illegally moved their assets overseas to avoid taxation. In exchange for repatriating their fortunes and allowing them to be taxed appropriately, the government’s amnesty plan will allow these scofflaws to avoid the legal repercussions of their actions. The central bank estimated that the amnesty could bring in as much as $42 billion in revenue.
On Friday, a meeting of officials from various agencies was called to discuss the proposed Tax Amnesty Bill with House Commission XI. At the meeting were members of the Center for Financial Transaction Reporting and Analysis, the National Police, the Attorney General’s Office and the Corruption Eradication Agency (KPK).
KPK Deputy Chairman Laode M Syarief made the point that the bill was unfair to regular citizens who actually paid their taxes legally and on-time.
“For example, if we were shopping in Alfamart and bought a bottle of Aqua of course we would py tax on it. But if rich people, the one percent of Indonesia, are exempted [from having to pay taxes) then frankly that is unfair,” Laode said as quoted by Kompas.
However, the KPK officials did acknowledge that such a bill would bring some much needed revenue to the state budget and so they gave their tentative support to the draft of the new law.
However, Laode said the government and parliament had to be sure to put a strict time limit on how long the bill would stay in effect and needed to work on fixing the tax system in the meantime.
Other anti-corruption activists and tax analysts have argued that the government’s tax amnesty plan is flawed, saying that the short-term boost in revenue isn’t worth making the country’s tax evasion problems even worse in the long-term.
