Tax Becomes More Important

Kompas/Laksana Agung Saputra

Robert Pakpahan for the first time as tax director general answers reporters’ questions after his inauguration at the Finance Ministry, Jakarta, Thursday (30/11). Previously, Robert, who started his career as a tax office employee in 1980, was the director general of finance and risk management since November 2013.

The task of the director general of taxation to strengthen public trust shows that taxes will play a greater role in the future.

Finance Minister Sri Mulyani inaugurated last week Robert Pakpahan as the new tax director general, replacing Ken Dwijugiasteadi.

The finance minister’s call on the new tax director general to build public trust is a sign that the government does not want people to worry about taxes. At the Kompas100 CEO Forum last week, the finance minister highlighted that the government wanted the people to willingly carry out their obligation to pay taxes. The government has given the people chance to pay taxes at the normal rate if there are properties that have not been reported in their tax return form (SPT) as long as they not discovered by the tax office.

The more advanced the economy of a country, the greater the role taxes play as a source of financing. Some say financing development using tax money is better than relying on debt.

Almost all agree that taxes can become a tool for equal distribution. One comprehensive and most-discussed study is by French economist Thomas Piketty. We too see the prosperity gap problem. The question the government must answer is how to impose taxes how much and what is to be taxed.

Basically, no one in Indonesia is exempt from paying taxes, Commercial goods and services that we obtain are taxed. That is why the issue of fairness and use of tax money are widely discussed. It is because the super rich can avoid taxes as they have the knowledge to abuse the loophole in the regulation.

The tax ratio, which is still low, only 10.3 percent of the national economy, needs tax reform. The challenges that must be completed are, among others, tax administration regarding the complexity of tax rules, definition of income and corruption or the incompetency of the tax office.

The task of the new tax director general is not easy. It gets harder with the fading state border that makes cross-border business easier. Therefore, international cooperation is more important.

The tax directorate general cannot work alone to increase state income. The number of taxpayers must be increased with the growing number of businesspeople and business investment so that the number of quality jobs and real income grow.

The balance between increasing or lowering tax and increasing tax without causing anxiety has become a challenge that is not simply about technical issues. We all have interest in helping the tax director general because the tax fund is needed to realize welfare for all.