Indonesia hails tax amnesty a success after raising US$7 billion but special treatment for super rich stirs public anger
A long list of the country’s wealthiest tycoons have rushed to declare assets with no obligation to say where they came from
Indonesia has hailed a tax amnesty as a major success after it raised more than US$7 billion in its first few months, but criticism is mounting that the controversial scheme lets the super-rich off the hook.
Authorities began the flagship policy with much fanfare in July, asking Indonesians to declare their hidden wealth in exchange for paying penalties far below regular tax rates.
President Joko Widodo is desperate for extra money to boost Southeast Asia’s top economy after almost two years in power, during which his efforts to turn around slowing growth have met with little success.
The tax amnesty is only good for the big people. It’s unfair, I always pay my taxes
The government hopes the initiative will lure back tens of billions of dollars stashed abroad, particularly in neighbouring city state Singapore, and get more people to pay tax in a country where only about 10 per cent are registered taxpayers.
The first phase of the amnesty – when people pay penalties as low as two per cent on declared assets – closed last week with better-than-expected results after a late surge in interest. More than 350,000 people declared assets totalling 3,620 trillion rupiah (US$278 billion), which brought the government 97.2 trillion rupiah (US$7.46 billion) in revenue, according to finance ministry data.
Widodo, known popularly as Jokowi, hailed the “trust from the people and the business community towards the government” while analysts welcomed the positive start to the amnesty, which runs until March. But the initiative has been watched with increasing anger by activists and some sections of the public in recent weeks as a long list of the country’s wealthiest tycoons have rushed to declare assets with no obligation to say where they came from.
Tommy Suharto, the multimillionaire son of former dictator Suharto, and James Riady, boss of major conglomerate Lippo Group, are among those who signed up.
The government has encouraged the participation of business chiefs in a bid to spur interest in the initiative after a sluggish start, with the super-rich rushed down VIP lanes in a blaze of publicity as they arrive at tax offices to sign up. But such treatment amounts to holding the wealthy up as heroes when all they are doing is paying their taxes, said Firdaus Ilyas, an activist from NGO Indonesia Corruption Watch.