President Joko Widodo, photo source: Batara News.
Dear Mr. President of the Republic of Indonesia, Mr. Joko Widodo,
When the global financial system is suspected to still provide room for the flow of illicit money resulting from corruption, crime, and tax evasion, then injustice is still at hand. When the bank’s secrecy system actually helps the flow of illicit money from developing countries to developed countries and to tax haven countries, injustices still occur. When the poor become more numerous and inequality between classes widens, while super-rich owners of large companies exploit natural resources and do not fulfill their obligations to pay taxes, then injustice is more prominent. Mr. Joko Widodo, as President of the Republic of Indonesia, you have the power to stop this injustice. As the Indonesian president who is a member of the G-20, you have more power to restore the rights of the poor in Indonesia and other third world countries.
The Panama Papers document signals that the practice of shell companies and the behavior of super-rich people in obscuring their wealth has hurt the hearts of poor people who obediently pay taxes. Panama is only one of many tax haven countries that provide facilities for corporations, super-rich people, and other criminals to avoid and avoid paying taxes. There are still many practices of tax asylum countries using their secrecy regime to provide impunity for corruptors, money launderers, and tax evaders. Super-rich citizens of Indonesia do it a lot. Foreign capital companies and domestic companies are also not a few who run tax evasion and avoidance.
President Joko Widodo certainly knows the consequences of avoiding and avoiding taxes for our country. Let us submit additional data, every year developing countries lose one trillion US $ due to corruption, money laundering, and tax evasion. That much money is very valuable to fill the lack of development funding and free developing countries from debt bondage. In 10 years (2003-2013), Indonesia lost a potential tax revenue of around 18,844 million US $ (approximately IDR 2,400 Trillion at an exchange rate of IDR 13,000 / 1 US $). That is, the average annual rate is around Rp. 200 trillion, a very large number, about 10% of the total Indonesian State Budget. This money has the potential for our taxes to evaporate, which flow from Indonesia to other countries and tax havens. This puts Indonesia in the 7th position of countries with the highest illicit financial flows in the world. This is the data from Global Financial Integrity (GFI).
President Joko Widodo, who is loved by the people of Indonesia, in addition to the existence of a tax haven, the high rate of illicit money flow from Indonesia is also caused by several fundamental problems and has a recurring tendency every year. Among these are the low level of compliance of taxpayers (especially the rich, super-rich, and corporate groups), the high potential for tax corruption, tax evasion and tax avoidance with complicated financial engineering methods, poor administration-institutional tax authorities, the low performance of tax authorities and low numbers taxpayer. Indonesia’s tax ratio from year to year is always in the range of 12-13% per year, even though its potential can reach 16-20%. Infrastructure development, creating prosperity, and realizing Indonesian justice must, of course, run smoothly and sustainably, so the main prerequisite is adequate funding.
President Joko Widodo, Trisakti, and Nawacita that you promised have been awaited by the people, it is time for you to race to prove the firmness in the taxation field for the benefit of the people. We need funding to realize Trisakti and Nawacita. Where did we get the budget? Of course, we will not depend on the blind exploitation of natural resources or massive debt. One appropriate way is to intensify tax revenues, especially from corporations and super-rich people.
President Joko Widodo who is also loved by citizens in various countries in the world, we ask that you play a stronger role in multilateral forums to encourage global tax cooperation that is more open, transparent, and provides justice for poor and developing countries. Please urge the G20 to dare to give sanctions to tax haven countries. Urge the G20 to agree on the registration of beneficial ownership for companies to become a global standard that allows sanctions for jurisdictions that do not follow this standard. And for the disclosure of this Panama Paper document, we collect your promise to publish the names of Indonesian citizens in the Panama Papers and conduct further investigations into the tax compliance of these names.
President Joko Widodo, so that we can uphold tax justice, we call on you to withdraw the Draft Tax Amnesty. The government’s plan to provide tax amnesty, in the midst of the high flight of illicit money from Indonesia to tax haven countries, will hurt the hearts of the little people who are obedient to pay taxes. Tax amnesty has a very high moral hazard potential. Tax amnesty will also have a negative impact on law enforcement efforts in the field of taxation and will reduce the level of compliance of taxpayers who have complied. Corporations and super-rich people should not be spoiled with tax incentives, they have often been taxed, don’t be forgiven. There are many ways to boost state revenue from taxes and we believe the Joko Widodo Government is able to do it. The condition is that the government MUST take tax intensification and extensification seriously, MUST improve tax regulation-institutional-administration, and MUST enforce tax law and tax sector transparency.
President Joko Widodo, Panama Papers is just one of the tip of the iceberg of the mountain of tax problems today. Indonesia is in a tax mafia emergency! Use this momentum to rush to eradicate the tax mafia that has gone over. Immediately, Mr forms a working group to restore the authority of the state in the presence of corporations and super-rich people. Indonesian people will surely support you fully. We, the undersigned, compliant Indonesian citizens who pay taxes will also support measures aimed at the glory and prosperity of the nation.
Jakarta, April 10, 2016,
Indonesian citizens and taxpayers who are members of the Fair Tax Forum:
1. Ah Maftuchan, Executive Director of the Prakarsa Association
2. Dadang Trisasongko, Secretary-General, Transparency International Indonesia
3. Sugeng Bahagijo, Executive Director, INFID
4. Maryati Abdullah, Coordinator of Publish What You Pay Indonesia
5. Siti Khoirun Nikmah, Program Manager, INFID