(Source: Financial Review)
Above the vast forests of oil-palm and rubber trees in Sumatra and the scattered tin mines on islands to its east, the Indonesian government is flying unmanned aircraft to catch cheats who under report the size of their plantations or the extent of their mineral extraction.
“Mines and plantations make good profits just taking stuff from nature,” said Samon Jaya, head of the tax office in South Sumatra and Bangka-Belitung islands. “But they don’t pay enough tax. This has to stop.”
For Indonesia’s cash-strapped government, policing revenue across a chain of 17,000 islands that would stretch from New York to Alaska is no easy task. Remote areas on the islands of Sumatra and Borneo, where most of the palm oil trees are grown, are difficult to access and the government can’t afford a dedicated satellite or helicopters.
Out of a population of 250 million, only about 900,000 Indonesians submitted a tax return last year, and the country’s tax-to-gross domestic product ratio of about 11 per cent is below the Asia-Pacific region’s average. Jaya says the mines and plantations in his jurisdiction only pay about 30 per cent of the tax they should. The industries, along with the rest of agriculture, forestry and fisheries, account for about a quarter of the nation’s nominal GDP.
President Joko “Jokowi” Widodo wants to plug such leaks to help fund a more-than $US400 billion infrastructure program. Since he took office in October, Jokowi has offered to exempt citizens from penalties if they settle unpaid taxes. He’s also raised pay for collectors.
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