Jokowi'sPushfor2016TaxAmnestyPlan

KickOffSeenasFlawed
ChrisBrummitt

cjbrummitt
January4,20165:00AMWIB

IndonesianPresidentJokoWidodo.Jokowi,asthepresidentis
known,isunderpressuretoincreasegovernmentspendingonpublic
worksandboostfalteringgrowth,whichlanguishedbelow5percent
formuchofhisfirstyearinoffice.
Photographer:OscarSiagian/GettyImages

Indonesiahadoriginallyplannedtoimplementamnestyin2015
OECD:Amnestywillbeharmfulforlongtermcompliance
IndonesianPresidentJokoWidodosgovernmentwillstart2016tryingtogetlawmakerstoapprovethe
countrysfourthtaxamnestysinceindependence,aplanitsayswilllurebackmoneystashedoverseastonet
anextra$4.4billionofrevenuethisyear.
Badmove,saytaxanalysts,anticorruptionactivists
andtheOrganisationforEconomicCooperationand
Development.Thequestforashorttermbudget

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IndonesiasNationalism

boostrisksmissingitsmarkandexacerbatingthe
countrysperennialtaxevasion,theysay.
"Indonesiashouldavoidtherepeatofthetaxamnesty,OECDDeputySecretaryGeneralRintaroTamaki

saidinaNovemberinterview."Peoplestarttohaveanexpectationthatanothertaxamnestycancome,and
thinkthistimewewontfileareturn,butperhapswewillintwoorthreeyearstime,"whichisquite
harmfultotaxcompliance,hesaid.
Jokowi,asthepresidentisknown,isunderpressuretoincreasegovernmentspendingonpublicworksand
boostfalteringgrowth,whichlanguishedbelow5percentformuchofhisfirstyearinoffice.Thewindfall
heexpectsfromtycoonsbringingtheiroverseasfortuneshomeisequivalenttoaboutafifthofhis
infrastructurebudgetfor2016.Sucharevenueboostwouldhelpkeepthebudgetdeficitwithinalegally
mandatedlimit.

ParliamentPriority
ParliamentwillprioritizethetaxamnestywhenitreopensmidJanuary,saidJohnnyPlate,amemberofthe
financecommissionatthelegislature.Thereisenoughsupportfromlawmakerstopassthelawneededto
implementinthefirstquarterof2016,hesaid.
Theproposedamnesty,whichthegovernmenthadplannedtoimplementin2015,wouldallowpeopleto
declarepreviouslyunreportedassetsandbenefitfromtaxratesaslowas2percent.Thatcompareswiththe
corporatetaxrateof25percentandthetoprateof30percentforpersonalincome.
Innormalconditions,itstrue,thiswouldwoundthesenseofjustice,"FinanceMinisterBambang
BrodjonegorotoldreportersinBaliinDecember.ButtheissuenowinIndonesiaisthattherearemassive
amountsofpeoplewhoarentpaying.Anamnestyisaninnovationtobreakthedeadlock.
IndonesiajoinscountriessuchasIndiainturningtotaxamnestiestoencouragebettercompliance.The
financeministrysbaseestimateisthattheamnestywillbringinabout60trillionrupiah($4.4billion)of
revenuein2016,saidEkoputroAdijayanto,aspecialadvisertothefinanceminister.

EnticingTycoons
ThemovewillencourageIndonesianswithmoneyabroadtobringithome,saidBrodjonegoro,saying
Indonesianshadanestimated2,700trillionrupiahofassetsinSingaporealone.Underthelatestdraftofthe
law,thosepromisingtobuygovernmentbondswithrepatriatedfundswillpayevenlesstaxthantherates
proposedfortheamnesty,hesaid.
BankingbillionaireTahirisresponding.Thetycoon,whogoesbyonename,saidheintendstobringsome
ofhisfortunehomeundertheamnesty,andheexpectsotherstojoinhim.Indonesiaisattractivebecausethe
rupiahisundervaluedandinterestratesarehigherthaninSingapore,hesaid.

Maybetheywontrepatriatealltheirmoney,butImsureasignificantamountwilldoso,saidTahir,who
wasgivenatopcivilianawardbythepresidentin2015.Thepresidenthasexplainedthatnooneisgoing
tostartinvestigatingwherethemoneycomesfrom.IfthismoneyisbroughttoIndonesiaitcouldbeused
productively,couldbeinvested,sotheeconomygetsgoing,createsjobs.

Yetthecountrylacksthemonitoringmechanismstoensurepeoplewhodonttakeuptheamnestyget
punished,orthatthosewhodososubmitalltheirassets,someantigraftactivistssay.
Theimpressionisthattheamnestyisbeingrushedthrough,saidFirdausIlyas,coordinatorofthebudget
monitoringandevaluationdivisionatIndonesiaCorruptionWatch.Wehavenorealdatabaseontaxpayers
andnotenoughtaxofficerstochasepeopleup.Ifthisisjustaboutpatchingaholeinourfinances,thereare
betterwaystodothis.
JokowiwantstoincreaseIndonesiastaxtogrossdomesticproductratioto16percent,upfromabout12
percentin2012,whichisbelowtheAsiaPacificregionsaverage.Outofapopulationof250million,only
about900,000Indonesianssubmittedataxreturnin2014.
Brodjonegorohadsetatargetof1,294trillionrupiahoftaxforlastyear,about30percentmorethanthe
actualamountcollectedin2014.Hepredictshewillfallshort,amidslumpingoilandgasrevenueand
slowergrowth.
TheheadofthetaxofficeresignedinDecember,citingdisappointingrevenuecollection.Thefinance
ministryestimatesthe2015budgetdeficitwillskirtclosetothe3percentofGDPcapimposedby
parliament.
Itsfarfromcertainthatmuchmoneywillberepatriatedundertheamnesty,asIndonesiansparktheircash
inSingaporebecauseofitstransparentinvestmentclimateandlegalcertainty,twothingswhichIndonesia
lacks,saidYustinusPrastowo,headoftheCenterforIndonesiaTaxationAnalysis.Theamnestywouldbe
thecountrysfourthsinceindependencein1945,hesaid,callingthemovelegalizedmoneylaundering.

Fromthegovernmentsidetheyneedtheadditionalincomenextyear,butthisamnestycanonlybeaone
offoccurrence,saidDavidSumual,chiefeconomistatBankCentralAsia,speakingDec.30.Hitting60
trillionwillneedagoodpublicitycampaignandpreparationbytaxofficials.
Beforeit'shere,it'sontheBloombergTerminal.

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