President Joko “Jokowi” Widodo has notified the House of Representatives about his intent to introduce another tax amnesty program, the second in five years, as part of the government attempt to boost tax revenues amid the Covid-19 pandemic, a senior economic minister said on Wednesday.
The Coordinating Minister for Economic Affairs Airlangga Hartarto said a stipulation about tax amnesty would be among items included in a bill for the 2009 Law about General Provisions and Tax Procedures revision.
“Items that would be revised include value-added tax, personal income tax, reduction of corporate income tax rates, value-added tax on a luxury item, excise, carbon tax. Then there are items related to a tax amnesty. We are looking forward to discussions with the House,” Airlangga told reporters.
The minister said Jokowi has Jokowi has sent a formal request to the House for starting the bill deliberation immediately.
Indonesia has collected Rp 228 trillion in taxes in the first three-month period this year, down 5.6 percent from the same period last year. That amounted to less than 19 percent of the government’s tax revenue target of Rp 1,229.6 trillion for this year.
Last year, the government managed to collect Rp 1,070 trillion in tax revenue, reaching just 89.3 percent of its Rp 1,198.8 trillion targets as the social restrictions to curb the spread of the Covid-19 pandemic dragged the economy.
Jokowi held his first tax amnesty program in 2016 and 2017, allowing tax evaders to come clean and declare their back taxes and hidden assets to the tax authorities, with only having to pay a much smaller amount compared to what they had to pay if the authorities caught them red-handed.
The program managed to collect information about Rp. 4,813.4 trillion of previously hidden assets and encouraged repatriation of Rp 46 trillion overseas assets, data from the Finance Ministry showed.
Also, the tax office raised a total of Rp 135 trillion in back taxes in 2016 and 2017, but that was not enough to cover the Rp 517 trillion tax shortfalls over the two-year period.
Lawmaker Anis Byarwati, a member of the Hause’s Commission XI overseeing finance and banking, expressed her concern about Jokowi’s latest tax amnesty proposal.
“Apart from being disappointed, compliant taxpayers are also afraid of that lost state income the result of tax amnesty will become a burden for them in the future, ” Anis, who comes from the opposition party Prosperous Justice Party (PKS), told the Globe’s sister publication Investor Daily.