By Elizabeth Pisani
8 February 1991
(c) 1991 Reuters Limited
JAKARTA, Reuter - Indonesia's tax collectors warn they will confiscate the land and assets of shirkers but sceptics doubt the tough talk will be backed by action.
"Really they are just upping the stakes, trying to bring non-payers, especially landowners, out of the woodwork," said one tax consultant on Friday.
"It's an attempt to see what can be done with publicity more than with action."
Information Minister Harmoko told reporters after a cabinet meeting earlier this week that President Suharto had ordered that land and assets should be seized from tax evaders if they ignored letters of warning from the tax office.
The seizure law, which has existed for years, has rarely if ever been used.
"Sometimes the tax men come in and put stickers on things and threaten to take them away but at the end of the day there is always a settlement," an accountant said.
Harmoko quoted Suharto as stressing that asset confiscation would be a last reort. "So what's new?" the accountant asked.
The tax collected is pitifully low in Indonesia, where accounting is erractic, corruption rife and where tax evasion has been described as the favourite national sport after badminton.
Finance Minister Johannes Sumarlin said this week that 58.9 per cent of companies and 70.5 per cent of individuals paid tax, figures that brought howls of laughter from tax specialists.
"Of course he's right, for registered tax payers, but if you want to talk about those that OUGHT to be registered we daren't even guess what the proportion would be," the consultant said.
Most recent figures, for 1989, show just 780,300 individuals registered as taxpayers, less than half of one per cent of the population of 180 million, while 210,100 firms were registered.
Two years ago Jakarta launched a drive to up its income by collecting more efficiently from the rich and businesses.
While businessmen complain the tax office is squeezing more out of the most honest taxpayers rather than casting the net more widely over evaders, the drive has shown results.
Income tax collection is expected to rise to 6.5 trillion rupiah ($3.4 billion) in the fiscal year to March 31 1991 from 2.7 trillion ($1.4 billion) in 1987/88 before the drive got going.
Land tax is expected to hit 620 billion rupiah ($326 million) this fiscal year from 275 billion ($144 million) three years earlier.
"But it's just a beginning for a country this size. I think there is a lot of frustration at how little has come in since property tax was introduced in 1986," an accountant said.
The stated determination to be tough, especially by confiscating land, could prove a two-edged sword.
Some analysts worry that if confiscation were to become the norm it could easily be abused as a way of appropriating land for projects for the government or its powerful friends.
The government has been careful to say it would not confiscate land from the poor, a concession seen vital in a country where land disputes between poor farmers and wealthy, well-connected corporations are a political sore point.
Tax officials told a recent parliamentary hearing land would not be seized from anyone with total assests of under 100 million rupiah ($52,000).
"I think they hope to shake out evasive landowners," a tax expert said. It is common in Indonesia for wealthy tax-evaders to hold land in the names of their servants or other nominees and fines for tax evasion are often uncollectable.
"But if you take the land away, it is the owner who suffers. The hope is that he will come out and negotiate and then you can say 'by the way, would you like to consider whether you have reported your income correctly?'" the consultant said.