Introduction
The financial integrity that the government faces is currently a challenge for both domestic and international governments. It is because the problems faced by the government in the financial sector are challenging to be resolved, ranging from the taxation sector, corruption, to money laundering) which are still not systematically fixed. According to Transparency International (TI) records Indonesia, in its 2020 release on the Corruption Perception Index (CPI), Indonesia got a score of 37, with 102 out of 180 countries surveyed. However, Indonesia’s ranking is still better than other ASEAN countries such as Vietnam, Thailand, Laos, Cambodia, and the Philippines. However, they are still far behind compared to Singapore (score 85), Brunei Darussalam (score 60), Malaysia (score 51), and Timor Leste (score 40). In addition, it is also a note by the FACTI Panel, which the President of the United Nations formed; the Panel revealed that several problems must be resolved by the Government of Indonesia through the Panel’s recommendation to achieve sustainable development.
The FACTI panel, represented by Shahid Hafiz Kardir as the UN High-level Facti Panel Member, revealed that financial problems in Indonesia are caused by a lot of corruption, tax evasion, or other things that weaken the integrity of government finances so that the existing international legal and institutional framework must be reviewed and identify any gaps, barriers, and vulnerabilities in the implementation design. In this way, we can make evidence-based recommendations on making a relevant and more comprehensive, robust, effective, and universal system to address gaps identified as barriers and vulnerabilities.
The Covid-19 pandemic, many countries experiencing a health crisis and a significant economic downturn, is no exception for Indonesia. In 2021, Indonesia will focus on economic recovery in all sectors to support state revenue. The central government has prepared several strategies that will be implemented to address the challenges of health, economy, tax finance to achieve sustainable development. In this way, the integrity of government finances will gradually improve systematically.
Indonesia, one of the fourth most populous countries globally, is quite aggressive in carrying out sustainable development by utilizing its existing resources. So that development financing through tax optimization and reducing the number of corruption crimes can run according to the national target. In addition, government financial integrity efforts through existing institutions and institutions have begun to take strategic steps to prevent and deal with money laundering and money laundering.
Meanwhile, according to the FACTI Panel note, the implications for financial crime and the findings of Asia and the world resulted in ordinary citizens losing $ 20-40 billion in bribes of $ 1.6 trillion or 2.7% of global GDP lost in a $ 7 trillion money laundering. In contrast, these findings could provide $ 669 billion worth of social protection targeting cash transfers for the poor in the form of nutritious food, quality education, and a universal health care system. In addition, it can reduce 132 million people in poverty, not to mention handling in South Asia due to covid-19.
Discussion
Optimizing Tax Revenues
Taxes are a source of state revenue to finance government programs/activities in the current period. However, seeing the condition of taxation in Indonesia, it is still not effective in its realization. The reason is, according to the Tax Justice Network, it estimates that Indonesia will lose up to the US $ 4.86 billion per year. This figure is equivalent to Rp. 69.7 trillion in 2020.
On April 30, 2021, the Secretariat of the Financial Accountability Transparency & Integrity Panel (FACTI), in collaboration with Public What You Pay (PWYP) Indonesia, the Center for Financial Transparency Analysis and Services (PPATK), and the Corruption Eradication Commission (KPK) conducted a dialogue via zoom meeting—in the dialogue, discussing precisely how the integrity of government finances can be faced and resolved through strategic steps through existing institutions or institutions in the country.
Optimism in realizing financial integrity and sustainable development has been done by the Ministry of Finance of the Republic of Indonesia by finding new instruments that can optimize state tax revenues. Meanwhile, to eradicate corruption, the Ministry of Finance has also made data integration instruments, in which the Ministry of Finance can integrate personal data to minimize the number of corruption crimes. However, for several years, the state has often been negligent in preventing corruption, especially in the taxation sector, making tax corruption elements still writhing, such as disclosing bribery cases involving officials within the national tax authority.
Good practices carried out by the government on tax matters mean that the enforcement and prevention systems have begun to be well organized. However, it is necessary to improve the system in collaboration with multi-parties, while the Ministry of Finance plans to complete it in 2023. Strengthening the law through a Presidential Regulation to integrate public services based on Family Identification Number (NIK) The Ministry of Finance has been discussing it for two years. It is the government’s commitment to a single early number. So that data integration, when carried out for all public service activities, will be integrated with taxes and with others.
On the other hand, the Covid19 pandemic is of particular concern to the government because, for almost one decade, the economic decline has been quite significant, and tax revenues have also decreased, not to mention budget refocusing has also been carried out by all agencies for the prevention and handling of Covid19. The good thing is that this does not prevent the government from consolidating after the pandemic, how the economy and tax revenues can run stably and even better through regulation, administration, and an advocacy agenda.
Seeing the current conditions rocked by the pandemic, the government is now discussing the taxation bill through the Ministry of Finance with a stakeholder to strengthen the system, justice, and optimization. Meanwhile, those who do not want to pay for taxes will be prosecuted, meaning that the optimization will be carried out specifically to increase state revenue through tax revenue. It is the Ministry of Finance principle towards a better, more transparent, and credible tax ecosystem. Transparency and accountability must be strengthened as the main principles in optimizing tax revenues and reducing financial crimes, corruption, and money laundering.
Prevention of Money Laundering Practices
The harmful practice of money laundering in Indonesia takes special care so that losses to the state do not gradually worsen. Throughout 2020, there was assets confiscation of four cases of Money Laundering (TPPU) in the field of misconduct, which amounted to Rp.8.9 billion. This figure is higher than the previous year, which was only two TPPU cases with Rp value. 5.3 billion. There has been an increase in ML cases in the tax sector so that the challenges faced by the government on financial integrity have not been appropriately handled. It means that the government must take appropriate steps to have no harmful practices to finance and achieve sustainable development.
Next year, Indonesia will host The Group of Twenty (G-20) to discuss economic and financial issues. As the host country, the government’s challenges that must be prepared at the forum are broad ideas/views on taxation issues to the integrity of government finances. The state faces quite complex problems; deep-rooted corruption cases, taxation, and money laundering have not been resolved quickly. However, through existing and strategic institutions, the state has acted systematically for the readiness of the upcoming G-20.
In minimizing corruption, taxes, and money laundering cases, the Corruption Eradication Commission (KPK) always strengthens internal functions to strengthen its resources. For example, in 2016, the KPK’s efforts to push for National Competency Standards through Labor Metering Regulation 338 on Integrity Development Experts resulted in publishing more than 100 professional integrity. On the other hand, the cooperation carried out by the KPK with 27 State-Owned Enterprises through Monitoring Evaluation (Monev) to be able to implement the ISO 37001 certificate.
In this way, personal integrity is a strategic step for the government to reduce corruption and money laundering practices. While the Financial Transparency Analysis and Service Center (PPATK) role concerning money laundering is crucial, seeing from the large number of reports submitted to the KPK, the problem is that the KPK can handle proven cases of laundering. It is one of the weaknesses in the legal process against money laundering, so there needs to be an encouragement for the KPK to increase the capacity of money laundering to explain, investigate, and investigate investigations related to corruption. Efforts to strengthen the law currently carried out by the KPK are by supporting the improvement of regulations with the aim of comprehensive legislation and building a system.
The government’s commitment to handling corruption and taxes is currently being prepared by the KPK and the Directorate General of Taxes to handle cases involving corruption and taxes. When there are cases related to taxes in good practice, it can be immediately handled jointly with different agencies.
Conclusion
Indonesia and Asia, and even globally facing the economy and financial integrity, can be carried out systematically, especially after the COVID-19 pandemic. Financial integrity has become a big goal for the country by reducing financial crime, corruption, and money laundering. Strengthening regulations on transparency and accountability play an essential role in avoiding money laundering, Indonesia in preparing the G-20. As the host is strategic enough to prepare efforts towards the integrity of government finances, this can be seen from institutions and institutions’ efforts and private parties that play a sufficient role in government financial problems. The government has always intensified strategies to optimize tax revenues, strengthen internal capacity and prosecute money laundering cases towards sustainable development. (HM/D0)