If tax pressure is between 30% en 70% , usually approximately 25% of the citizens are positively willing to pay their taxes. About 50% will be doubters. And roughly another 25% will try to evade taxation. Apparently in Indonesia tax-paying mentality is worse. According to this Tempo-article almost 65% is trying to escape this civilian duty. For corporate taxpayers the percentage is even a staggering 95%.
First of all tax collection should be well organized. People’s perception should be that each and every tax payer will get a proper tax assessment. And the tax office should operate neutral, objective and transparent. It’s doubtful whether this precondition has been fulfilled. Whether the system is really operating effectively. So citizens may think “why should I pay up to the full if my neighbour uses one of the many system-flaws to escape?”.
Secondly tax officials should be fiscal experts cherishing professional integrity. Gayus wasn’t and Anggrah Suryo isn’t either. With apologies to the many decent civil servants it looks like the tax offices too often are crime scene. Apparently you can negotiate a ‘special mild treatment” if you’re willing to pay a handsome bribe. The image of corruptibility doesn’t contribute to a positive attitude on the part of the citizens.
Thirdly a significant part of taxable assets and income are being kept out of sight. There’s a huge informal economy. And quite a number of people are in the business of lining their pockets with dirty money. It actually comes down to “pre-emptive” stealing from public’s welfare. All that undermines a sound public morale of taxation. Many will be inclined to see tax evasion as a national sport for smart people. Those who have the means will transfer their money to foreign tax havens. In other words: these are “sportsmen” unscrupulously denying Indonesia what they owe the country.
Those 65% unwilling Indonesians and I differ. Approximately 45% of my income is taken by Dutch Treasury. Yet I rationally and gladly comply. Honest.
That shouldn’t surprise anyone. Because I’m sure that if we could ask a sophisticated middle class egg on it’s way to the womb and the well-informed inseminating sperm of genuine humble descent just before being embraced by her, where they would prefer the baby to be born, the answer probably would be “either Denmark, Norway, Sweden, Finland or, eh yes, The Netherlands”. Though these countries severely tax their citizens, they in return provide them with very good collective goods and facilities from which especially lower and middle classes tend to benefit.
And that, in my opinion, is the decisive point explaining why many people over here think it right and just to pay their taxes and a staggering percentage of citizens in a few other countries try their utmost to thwart and evade their civil tax duties. Though I’m not always happy with the outcome of the political allocation process in The Netherlands these days, to me our relative “big government” almost equals good government. Provided politicians and civil services keep up their clean tradition.
Big business, bankers and billionaires perhaps will not agree, but I appreciate public services which accomplish what I wouldn’t be able to achieve on my own. A good affordable education system for all children and grandchildren, a good affordable public healthcare for everybody, a state of law for all irrespective of skin-colour, creed or faith, a relative well organized fair distribution of the nation’s GPD, a guarantee for decent standards of living for the sick, the physical and mentally handicapped fellow citizens, a dense network of reliable public transport, clean air, clean water, clean soil, sensible environmental policies, regular garbage collection, fire brigades, security as well as law and order in the public domain, supervision and control over and organizing accountability of private enterprises and a lot more.
So perhaps the most important cause of Indonesian tax evasion is that government precisely doesn’t do that. Or at least doesn’t do that yet: deliver. It does not use taxpayer’s money in an effective and efficient way to provide the necessary public services. At least not enough, not to people’s satisfaction. And the internal tax reform seemingly isn’t a solace either.
In stead the images of Anggra Suryo and Gayus stick. It makes people wonder: ‘why paying taxes while tax officials are stealing taxpayer’s money for their own private bank accounts?’