Observer: Tax Intensification, Extensification Must Be Simultaneous

Jakarta, Oct 16 (ANTARA) - Intensification of tax collection and extensification of tax-resource base should be carried out simultaneously in an effort to increase tax receipts which are now slowing down, an observer said. "Tax intensification and extensification should ideally be carried out simultaneously because both are effective in anticipating the decline in the country`s tax revenues," Telisa Aulia Falianty of EC Think Indonesia said here on Tuesday. However, she said both programs had their respective weaknesses and strengths. Tax intensification program does not need a lot of funds because through this program tax authorities only collect taxes but they were required to tightly and forcefully uphold the law. The law must be forcefully enforced. "The law must tightly an forcefully be implemented so that tax avoidance will not happen. Such enforcement should also be imposed on errant tax officials," she said. She said that tax officials who were not transparent often embezzled taxes that led the public to distrust tax institutions. This caused many sides to avoid paying taxes, causing the state receipts from the tax sector to decline. In the meantime, the tax extensification program, according to Telisa, needs a bigger fund because this system requires the directorate general of taxation to make a list of new tax payers. "So, it will need a bigger fund because a census and other processes must be conducted before producing a list of new tax payers," she said. This could cause a problem if the government misses its target or makes a mistake when deciding a list of new tax payers, for example, it imposes a high tax rate on small-scale businesses. She said that a big amount of tax receipts would raise the country`s tax ratio which at present was recorded at 12.7 percent. Telisa said that Indonesia`s tax ratio could be at 20 percent level if its economic growth was taken into account. "Indonesia needs to reform its taxation system because, with its economic growth at the average of 6 percent, its tax ratio should have been set at the level of 20 percent," she said.