GO
Loading...

Indonesia Army to Train Tax Collectors

Ben Bland and Taufan Hidayat in Jakarta
Thursday, 21 Jun 2012 | 3:41 AM ET

Indonesia’s tax office has come up with an unconventional response to pressure to raise the paltry tax take and shed its reputation for corruption in the form of a military boot camp for tax collectors.

11 Aug 2006 -- Palu, INDONESIA: Armed soldiers patrol Palu city a day before the execution of three Christians by a firing squad 11 August 2006. Hundreds of Indonesians rallied to protest the imminent execution of three christians found guilty of instigating attacks on Muslims in religiously-divided Sulawesi, a Christian leader said. The three men -- Fabianus Tibo, Dominggus da Silva and Marianus Riwu -- are due to be executed by a firing squad of 12 police on 11 August, a spokesman for the atto
Fahry Fauzy | AFP | Getty Images
11 Aug 2006 -- Palu, INDONESIA: Armed soldiers patrol Palu city a day before the execution of three Christians by a firing squad 11 August 2006. Hundreds of Indonesians rallied to protest the imminent execution of three christians found guilty of instigating attacks on Muslims in religiously-divided Sulawesi, a Christian leader said. The three men -- Fabianus Tibo, Dominggus da Silva and Marianus Riwu -- are due to be executed by a firing squad of 12 police on 11 August, a spokesman for the atto

The tax office said on Wednesday that it would soon start sending its 32,000 tax officers for two to three weeks of training with the army in an attempt to boost morale and promote professionalism.

Despite recent efforts to fight rampant corruption and reform the bureaucracy, Indonesia’s tax take as a proportion of economic output is among the lowest in emerging markets and the G20, according to the IMF. This tax shortage limits the government’s ability to pay for the infrastructure it needs to maintain rapid economic growth.

“This is not military training but disciplinary training that is aiming to increase employees’ patriotism and morale,” said Chandra Budi, spokesman for the tax office. “It requires a strong mentality and much vigor to fulfil the task of collecting tax.”

The tax officers will be put through their paces by the presidential security guard and the army’s strategic reserve command (Kostrad), an elite unit that has been accused of major human rights abuses in the past.

Tax revenues amounted to just 10.9 percent of gross domestic product in Indonesia, according to the latest World bank data, behind Thailand, at 16 percent, Turkey, at 20.5 percent, and Zambia, at 16.6 percent.

Out of a workforce of 110 million, only 23.2 million people and companies are registered with the tax office, while only 10 million actually submitted a tax return this year.

The government wants to increase the tax ratio to 15 percent and has launched a number of crackdowns on tax avoiders and initiatives to register more taxpayers.

But they face an uphill struggle in the world’s 100th most corrupt country, according to the latest perception study by Transparency International, a campaign group.

Many Indonesians believe that tax officers are among the worst offenders after a number of high-profile graft cases where tax collectors have been accused of taking large bribes from companies and individuals in exchange for helping them to evade their taxes.

One senior government official dismissed the boot camp plan as a “gimmick”, arguing that tax officers did not need military-style training to become more professional.

Danang Widoyoko, the co-ordinator of Indonesia Corruption Watch, a local NGO, shared this view.

“The so-called disciplinary training at the tax office won’t be effective in increasing its integrity because the corruption there is systemic,” he said.

Mr Widoyoko said that if the government was serious about fighting corruption in the tax office, it should conduct more “wealth verification” checks on senior officials, seizing any suspicious assets.

Theo Thomas, who leads a World Bank team advising the Indonesian government on bureaucratic reform, said that the boot camp plan needs to be seen in the wider context of the improvements made within the tax office over recent years.

“They’ve introduced more rigorous recruitment and retention procedures and increased staff pay in return for more individual accountability,” he said.

But Mr Thomas added that the government could generate as much as $45 billion in additional tax revenue if it could bring the system up to international standards.

Gayus Tambunan, a mid-ranking tax official, was jailed for seven years last year in a corruption scandal that gripped this nation of 240 million people and raised questions about the effectiveness of the government’s efforts to clean up the civil service.

Even after he had been detained, “SuperGayus”, as he was dubbed in the Indonesian media, paid off his guards to allow him out of prison on jaunts that included a trip to a tennis tournament on the resort island of Bali.

Featured

Contact Asia News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Asia Video