Tax Officer Shortage Sees Indonesia Miss Out On $27 Billion Annually

December 13, 2013Indonesiaby EW News Desk Team

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Indonesia is losing up to 320 trillion rupiahs ($26.6 billion) a year in tax receipts due to a significant shortage of available tax officers, the Jakarta Globe reported on Friday, with the government’s tax collection agency hoping to hire at least 2,500 new personnel next year.

According to Fuad Rahmany, the Finance Ministry’s director general of taxation, the tax office presently employs 31,316 officers to watch over 24.8 million registered taxpayers.

This means that one Indonesian tax officer will have to serve 7,700 people, the highest ratio among OECD-profiled countries, compared to a 1:727 ratio in Germany, 1:1,000 in Australia; and 1:1,818 in Japan.

The growing number of retailers and small and medium businesses also makes the job harder for the tax office, which has to choose to allocate its limited human resources to monitor the biggest taxpayers, such as mining companies.

“That is the risk of being dependent on those tradable sectors,” Fuad said at an editors’ conference in Jakarta on Wednesday night.

“But that is the choice we have to make with the resources at hand,” he added.

Fuad claimed that the tax office had collected just 81 percent of its revenue target for this year, despite an improvement in its internal procedures, tax officer productivity and information technology.

“But there is a limit that IT can do. You cannot expect to confront people using IT, which is exactly why Germany and Japan employ so many tax officers,” Fuad said.

Presently, a single rupiah spent on collecting taxes can net 184 billion rupiahs in tax revenue, compared to Rp 139 billion four years ago. Each tax officer yielded 32 billion rupiahs, from 17 billion rupiahs four years ago.

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The tax office is hiring 2,500 new officers next year, but this is still far short that what it needed, Fuad said. “The math is simple. Add 10,000 more officers, then you can get an additional 320 trillion rupiahs annually,” he claimed.

All government recruitment is being handled by the State Administrative Reform Ministry, which has only allocated 6,000 new positions for all ministries in 2014.

Azwar Abubakar, the administrative reform minister, said in August that the ministry would try to shift some officers from regional governments to the tax office.

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