JAKARTA: The government expects that its new tax policy, which writes off any fines in exchange for taxpayers settling previously unreported obligations, will bring in Rp 130 trillion (US$9.52 billion) to the state revenues.
The Finance Ministry’s director general of taxation, Sigit Priadi Pramudito, said the so-called “sunset policy”, which was imposed in April this year, could help the tax office collect more revenues.
The policy implementation had resulted in Rp 30.1 trillion in revenues as of June, consisting of Rp 22.5 trillion from intensification programs and Rp 7.6 trillion from reaching out to new taxpayers (extensification).
The government is replicating the 2008 success of the sunset policy, which includes a write-off of tax fines for taxpayers who settle previously unreported obligations.
“Initially, we expect Rp 250 trillion from the policy, but there is a calculation of a Rp 120 trillion shortfall, so that we set Rp 130 trillion as our target,” Sigit said in a press conference on Tuesday.
Tax office spokesperson Mekar Satria Utama said the remaining Rp 100 trillion of additional tax revenues from the sunset policy could be achieved through enhancing public awareness.
The tax office is also waiting for feedback from taxpayers who missed their tax payments or submitted insufficient reports in the past years, he added.
“Based on our experience, the average length of the process between the policy announcement and feedback will take six months, so that we can narrow the gap in collection,” Mekar said.
The tax office imposes the policy until the end of this year, which is the last chance for taxpayers to fulfill their obligations.
The government’s tax revenues reached Rp 531.1 trillion by the end of July, or equal to 41 percent of the total target of Rp 1.29 quadrillion this year. The July figure was mainly made by a 13.55 percent increase to Rp 293.5 trillion in non-oil and gas income tax revenues.
As for the prediction of a Rp 120 trillion shortfall, Sigit said the tax office had conveyed the calculation to the President Joko “Jokowi” Widodo, Finance Minister Bambang Brodjonegoro and the House of Representatives because of weak economic growth. Based on the calculation, the tax office predicted that total tax revenues would only achieve 91 percent of target.
“We acknowledge that it is difficult to achieve the target, but we are still expecting more positive feedback from the sunset policy. We will increase more awareness on the policy as we still have time until Dec. 31,” Sigit said.
Mekar said the tax office was also expecting a spike in tax collection in the second half as the government started to boost its expenditures, which would trigger private spending and consumption.
Yustinus Prastowo, an executive director for the Center for Indonesia Taxation Analysis (CITA), said he was pessimistic with the tax office’s expectation to collect another Rp 100 trillion from the sunset policy until the end of this year as it was still facing inaccurate data on taxpayers.
“A lot of people said that they just knew about the policy and we don’t see a situation where many state officials use this chance to fix their tax reports. More people will follow if there are a lot of state officials who support this policy,” Yustinus said.
According to Yustinus, the remaining chance for the government to boost its tax revenues is only by expecting a boost in spending, which may mean that it will struggle in finding new tax revenue sources.
