By Andi Zulfikar, Employee of the Directorate General of Taxes
No legacy is so rich as honesty, William Shakespeare.
One part of tax reform, tax amnesty, becomes hot news. It is relatively success. 135 trillion IDR was collected, 4,864 trillion IDR was declared, and it is about 970,000 people took part in this program. It gives our government revenue to build infrastructure projects, and gives wider tax database for Directorate General of Taxes (DGT). Tax amnesty gives not only a trust for the investors, but also helps government to control fiscal deficit.
The tax reform is continued. The need of our country is the reason. Indonesian tax ratio in 2016 is under 12 % and it is a signal to make a fundamentally tax reform if we want our country become a developed country. Tax reform must coverage organization reform, business process reform, human resources reform, information technology reform, and the last is tax regulation reform. The goals of this tax reform are to build a strong, credible and accountable tax institution. It is for our future.
Yes, it’s not easy to develop a country. To develop a country, it needs government revenues. One of government revenues comes from tax. Because of that, our government always rethinks the way to increase tax collection in Indonesia. We have to change. We can do it.
According to Rao (2014), tax reform is the process of changing the way taxes are collected or managed by the government and is usually undertaken to improve tax administration or to provide economic or social benefits. He explained, in many developing countries, the immediate reason for tax reforms, has been the need to enhance revenues to meet impending fiscal crises. In Indonesia, more than 75 percent government revenue comes from taxes. That fact makes taxes policy must become priority, especially tax reform policy.
One of tax reform agenda is 15 percent tax revenue-to-GDP ratio in 2020. It is a challenge. It is not only a Challenge for DGT, but also for all of us. Taxes collection is not only the problem of DGT, but also the problem of all of us who live in this country. We must plan it, we must prepare it.
There are many challenges. Currently, to serve 30 million registered taxpayers, DGT has at least 38,000 officers. Chatib Basri, former finance minister, said Indonesia with 254 million people needed about 100,000 tax officers. If it is compared with Singapore, the number of tax officers has about 2,000 officers and the population is about 5 million people. It means that the number of tax officers in Indonesia is not ideal right now. It’s not only human resources problem that DGT face now. There are problem of system of information technology, the problem of data, and many others. For DGT all of those problems are a challenge. DGT doesn’t give up, DGT do the best for the country. DGT will reform.
Planning Tax Reform, Preparing a Legacy
More than 250 million people live in Indonesia right now, and at least 25 percent of them are under 15 years old. It means that 25 percent of us are still in their best time to plan their future. To plan a better future, that young generation will need more attention from government. Our government must give them the best education opportunity and best health service. Strong government comes from strong young generation.
Perhaps, the best system that they can use in the future is the best legacy for them. What we can do is plan something better than yesterday, so it will continuously grow. We have a duty to give the younger generation a system than can make them take their goals easier. Yes, surely, it will take time and higher effort, but it is not impossible.
It’s time we ask ourselves some serious questions about our and their future. We must be honest, like or not, tax is needed by our country. This is the place where we live, and we must stay focus, stay together to reach the goal of our country. We want to stand on our own feet. We want to have good governance. Of course, it needs tax as source of government revenue.
We must do our best, prepare for the worst, and keep the best wishes. Tax Reform it’s maybe not the answer of everything, but, by the God’s will, tax reform is an answer for our next generation that we have done something big for them.
Let’s prepare our self!
*) 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.