Looking at the State Revenue Agency

The new government's efforts to form a state revenue agency require support from the community.

KOMPAS/HERYUNANTO

Illustration

Approximately 20 years ago, Rosario Manasan released the results of a study which concluded that tax reform in many countries generally led to efforts to find the ideal model of tax institutions (Manasan: 2003).

The model that then becomes a recommendation is often called semi-autonomous revenue authority (SARA). This terminology actually refers more to the concept of framework and governance of a collection administration organization in order to prepare the institution to become autonomous and shift from the previous model in the form of a regular institution (Crandall and Kidd: 2010).

The presidential and vice presidential candidates who won the most votes, Prabowo Subianto-Gibran Rakabuming Raka, placed state revenue under "special attention" with a program in the form of establishing a state revenue agency (BPN). This will be included in the fast results program to encourage the achievement of the tax ratio, the figure of which is aimed at reaching 23 percent.

Also read: The State Revenue Agency is not a "Panasea" Tax Problem

Forming the National Land Agency (BPN) is not just about separating the state revenue management organization from the Ministry of Finance. It is not about its structural position, but rather related to the transition of the current organization into an institution with specific authority and jurisdiction.

With this understanding, mere efforts to "change clothes" can be avoided because the ideal process is to create a "new costume" so that in the future, the problem of a "narrow new costume" does not occur.

In Indonesia, scientific research on SARA (ethnic, religious, and racial tensions) has been initiated and published in 2013 in the DDTC Working Paper by Bawono Kristiaji and Andri Poesoro. The research concluded that institutions are a significant factor that influences acceptance.

In another part, this research also concludes that the decision to adopt the SARA model "is clearly not solely influenced by the internal administration calculation, but should also include broader political-economic considerations" (DDTC: 2013).

Armed with the results of research so far, in 2015 there was actually an effort to form an institution called the tax revenue board (BPP) which then President Joko Widodo prepared his presidential mandate. However, the dynamics have not yet been realized.

This is understandable considering that the government's focus at that time was maximizing state revenues through the tax amnesty program. This is to ensure the availability of increased budget requirements for program financing during the transition to the new government. At that time, the initiative to form a BPP was not at the right momentum because it could disrupt the performance of the existing organization.

At the same time, the government is focusing on the global AEOI initiative, which is also a momentum to improve the tax database. However, the government is aware that this task is not simple, so the government's commitment is ultimately directed towards a comprehensive improvement of the tax administration system.

The new government's efforts to form BPN require support from the community.

Then Presidential Regulation Number 40 of 2018 concerning Tax Administration System Updates (PSAP) was issued, which gave birth to the Tax Administration Core System Update (PSIAP) project. The main work is building a core tax system through implementing system integration for all core tax administration business processes in Indonesia.

As part of the quick results program, the establishment of the National Land Agency can at least be parallel with the large agenda of tax reform currently underway. It is not impossible for presidential candidate Prabowo to make this program a 100-day program after his inauguration in October 2024.

Therefore, the Prabowo-Gibran team and President Jokowi can consider placing this program as one of the main priorities in the government transition. Initiation of discussions can be started with the relevant ministries so that existing baselines can be utilized.

Moreover, in Presidential Decree No. 40/2018, the organizational model scheme is a very strategic output because the tax administration redesign that is being developed has taken into account common practices used in various modern taxation systems.

Functional organization

There are many factors to consider in determining the organizational model that can be used. In its study, the IMF published a functional organizational approach model (IMF: 2010). In the Indonesian context, this model can be combined with the latest developments in the Directorate General of Taxes (DJP), which is now implementing work mechanisms in the Compliance Committee scheme, and results in good organizational performance.

If this functional organizational approach is to be adopted by BPN in the future, what is happening in the DJP environment today can be used as a baseline.

For operational flexibility, the design of BPN needs to refer to the Otoritas Jasa Keuangan (OJK) institution. Under Law No. 4/2023 on the Development and Strengthening of the Financial Sector (P2SK), starting in 2024, financial institution levies that were previously in the form of direct contributions to the OJK have been changed to non-tax state revenue (PNBP) in the state budget.

Later, OJK will receive a portion of financing from the APBN according to its work plan. An option for BPN in the future could be to use an operational financing model with the cost collection ratio allocation approach, taking a certain percentage ratio of realized state revenues in the APBN as BPN's operational costs.

It is possible that presidential candidate Prabowo will make this program a 100-day program after his inauguration in October 2024.

Currently, Indonesia is trying to join the membership of OECD countries whose tax ratio components are different from Indonesia's tax ratio components so far. The average tax ratio achievement of OECD countries is 34 percent, very far above our achievements.

The BPN challenge is not easy. Research on the direct relationship between tax ratio and organizational model cannot provide a satisfactory answer for all of us. However, it must be acknowledged that the organizational structure of a tax administration is a key component of an effective modernization and reform program (Maureen Kidd: 2010).

The new government's efforts to form BPN require support from the community. The process of redesigning tax administration components and tax policy components is expected to increase the tax ratio for the sustainability of all development programs needed by society.

Yeheskiel Minggus Tiranda, Professor of Tax Law, Sultan Agung Islamic University, Semarang