Jakarta, IO – Taxes are the guardian of state sovereignty. At least America, Germany, Japan, and several developed countries in the world have proven this. Citizens of developed countries obediently pay taxes as an orderly source of state revenue. State revenue is government capital directed to build the nation and prosper the people. The guaranteed welfare of citizens is one of the characteristics of a sovereign state. When the condition is sovereign, it cannot be dictated by anyone.
The founders of the Republic of Indonesia have thought about this. Textually, the thoughts of the state’s founding fathers are contained in the opening text of the 1945 Constitution. The fourth paragraph of the preamble to the 1945 Constitution states that one of the objectives of establishing the state is to promote public welfare.
To promote public welfare, the state requires the submission of its citizens to paying stipulated taxes. This is also contained in the 1945 Constitution, precisely in Article 23A, which reads that taxes and other levies for state needs are regulated by law. Until now, Indonesia has imposed six types of taxes on citizens and institutions: income tax (PPh), value-added tax (PPN), luxury goods sales tax (PPnBM), stamp duty (BM), land and building tax (PBB) and local taxes (regency/city or province).
Taxpayer Rights
The Organization for Economic Co-operation and Development (OECD) notes that Indonesia’s tax ratio declined by 1.5 points in 2020. The tax ratio is the tax collected on an individual to gross domestic product (GDP) over a given period. In 2019 the tax ratio was 11.6 %, while in 2020, it was 10.1%. This figure is the lowest since 2007.
Even though the Indonesian government, through the Ministry of Finance, has made several efforts to increase public awareness of paying taxes, such as giving gifts to taxpayers who file on time, improving field services, and conducting socialization and education activities.
However, this effort has not been maximally successful, because criminal cases have arisen, that have befallen ranks of the Ministry of Finance employees, especially those on duty at the Directorate General of Taxes. Whether we realize it or not, this has led to unsavory opinions about Indonesia’s tax transparency.
Tax transparency is a crucial issue for tax compliance. Tax transparency is the people’s right as subjects and objects of taxpayers. Various tax literature books explain that good governance of tax institutions is a main requirement for tax transparency.
Therefore, the authors suggest that the Minister of Finance should continue to improve the integrity and professionalism of tax officials in carrying out their duties. Concretely, reward and punishment policies for tax officials must be upheld. This is important to revive mutual trust between the government and the taxpayer community. If there is high mutual trust, paying taxes will be done willingly as necessary, not an obligation.