Tax Reform, How's your News Today?

Old Official Building of DGT (photo: Slamet Rianto/article: Yos Wiyoso Hadi [Yos W Hadi])

By Wiyoso Hadi, Employee of the Directorate General of Taxes

On many occasions, the Director General of Taxes Fuad Rahmany asserted that the Reforms commitment of Directorate General of Taxes (DGT) is ongoing. He promised to crack down firmly indiscriminately tax officials who conduct fraud and abuse of authority. Former Chairman of the Capital Market Supervisory Agency and Financial Institution (Bapepam-LK) also instructed all DGT employees to work with high militancy, act and behave according to the values of the Ministry of Finance. "Prove that these values are not just a slogan," was his message to all DGT employees.

Yet many in the community still doubt whether the DGT's Reforms is still being carried out or simply saying without proof? If we look back, we find that the Code of Conduct in the DGT has been enforced since 2002, i.e. prior to the issuance of Government Regulation Number 42 Year 2004 on the Code of Civil Servants. The Standard Operating Procedures (SOP) was perfected. Disciplinary punishment at DGT is also enforced. From 2006 to February 2012 alone, there were 2,287 employees who are subject to disciplinary action of DGT. In year 2006, 210 employees was punished; in 2007, 196 employees; in 2008, 406 employees; in 2009, 516 employees; in 2010, 657 employees; in 2011 263 employees, and until February 2012, 39 employees have been punished. Two among those 39 employees punished in 2012 was dismissed from the civil service.

In addition, the channels of tax complaints are made open. Public complaints against the DGT can be reported through KRING PAJAK 500200, Whistleblower System, e-mail: or delivered directly to the Tax Office (KPP) or Tax Services, Counseling and Consultancy Office (KP2KP). In addition, surveys by independent agencies such as the KPK, IPB, and AC Nielsen shows positive performance results of the bureaucratic reforms in the DGT.

Based on AC Nielsen survey, for 2006, the High Income Taxpayers Tax Office (KPP WP Besar) won 81 EQ Index (on a scale of 0-100). For 2007, the Middle Income Taxpayers Tax Office (KPP Madya) in Indonesia reached an average of 78 EQ Index. And for 2008, the Low Income Taxpayers Tax Office (KPP Pratama) in Indonesia reached an average of 71 EQ Index. Later in 2010, according to the Anti-Corruption Initiative Assessment (PIAK) announced by KPK, DGT achieve a score of 9.73 for the implementation of the Code of Conduct (on a scale of 0-10) and the Anti-Corruption Campaign score of 9.82 (on a scale of 0 to 10). Then in 2011, based on the survey Integrity conducted by KPK, it is published that DGT Integrity Index reaches a score of 7.65 (minimum score of 6.0, on a scale of 0-10). Still in 2011, based on a survey conducted by IPB, it is reported that the Taxpayer Satisfaction towards DGT Service Index achieve a score of 3.79 (on a scale of 0-4).

Quantitatively based on the index data above, Reforms in the DGT has been running. Then why do many in the community still skeptical about the bureaucratic reform process in DGT? It is may be because the public expectations are very high towards Reforms in the DGT. So that all cases of alleged tax fraud occurred in DGT even in the slightest could reduce public confidence toward the Reforms of DGT. Therefore DGT must continue to move forward, striving for Zero Corruption.

So, how to realize the Zero Corruption? In writer's opinion it is not just need support but it takes full commitment from all parties, the public, especially the taxpayers and all tax authorities to combat abuses in the field of taxation. As quoted from Professor of Economics UGM, Mudrajad Kuncoro, "... from the standpoint of political economy, the tax mafia is hard to be dismantled. Various mischievous taxpayers, politicians, and local officials have been tried to interfere in the tax mafia eradication process in order to fight for their own business or personal interest." (Reuters, March 12, 2012).

Besides that, it is proposed to close negotiation interaction between the taxpayer and the tax authorities impose a tax system can be considered final. Namely, the enactment of taxation which is easy, simple, has the rule of law, and does not require a meeting with the taxpayer's tax authorities in determining the tax assessment to be paid by the taxpayer. All this of course still need to be studied more deeply, but as a step forward to continue the process of fixing the Tax Reform in Indonesia, why not?

*) The information and views set out in this article are those of the author and do not necessarily reflect the official opinion of the institution in which the author works.