The Indonesian finance minister has admitted that the Directorate General of Taxation has not been able to optimally collect taxes from the rich people due to regulation constraints, The Jakarta Post Online reported on Monday (Aug 14).
Minister Sri Mulyadi said in Jakarta over the weekend that she had asked the tax office to study the tax system of the other countries to know whether the collection system for income taxes and value added taxes for both individuals and institutions can be improved.
She said that her ministry wanted to revise the regulations on taxation so that the tax system would reflect the justice system.
Under the current system, there are four brackets of income taxes for individuals: people with incomes of more than Rp 50 million (US$3,846) per year (5 percent tax); people with incomes more than Rp50 million but less than Rp 250 million (15 percent tax); people with incomes exceeding Rp250 million but less than Rp500 million (25percent tax); and people with incomes over Rp 500 million (30 percent tax).
Center for Indonesia Taxation Analysis executive director Yustinus Prastowo agreed with the minister that the four brackets of tax payers had not reflected the justice system in tax collection.
He said the tax system should be more progressive by expanding the number of brackets of taxpayers.