Room for Tax Payment

Kompas/Totok Wijayanto

Taxpayers line up on the last day of the third phase of the tax amnesty at the Jakarta tax office, which fell on Friday, March 31.

The government has given an opportunity to the people to declare wealth that they had not reported to increase tax compliance.

The revised Finance Minister Decree offers tax amnesty participants and those who did not take part in the tax amnesty a chance to disclose their undeclared wealth. If they disclose their undeclared wealth before they are investigated, they will be billed for their final income tax payment.

Under Law No. 11 of 2015 on Tax Amnesty, taxpayers incur sanctions of payable tax with administrative fines if they are found to have undisclosed wealth by the end of the tax amnesty. The revised decree omits the sanctions.

Even though the government appears to have move backward, the policy deserves appreciation. The objective of the policy is to improve taxpayer compliance. Public awareness of and compliance with paying taxes are very important, because development is financed through taxes, the same as in developed countries.

The policy is being issued at a time when some taxpayers feel that tax officers have treated them as though they were not compliant in paying their taxes. The expression "hunting in the zoo" has also been heard frequently in reference to hunting down taxpayers who had already paid their taxes. In reality, one of the objectives of the tax amnesty is to expand the taxpayer base.

It would be better if the government\'s step were accompanied with systematic planning and constant dissemination of information to the public. The people want an explanation on the tax collection’s objectives, measurable utilization, and good services.

Do not allow the public to worry or become reluctant about paying taxes. It is feared this would lead to tax evasion and to unpredictable consequences, such as reluctance for business expansion.

We realize the government urgently needs tax revenues to finance development, but it also needs to take into consideration tax mechanisms that give room for businesses to grow at a time when public consumption is declining.

Economists use a mathematical model to help comprehend how public economics works. However, we know and it has been proven by 2017 economics Nobel laureate Richard H Thaler that an individual’s decision is also determined by social, impulsive, and less reasonable choices.

This issue cannot be disregarded if the government wants to increase its tax revenues. One of these is the public sense that the government is fair in collecting and utilizing taxes.