President’s heat on tax could ‘harm’ business

(News Terupdate) - President Susilo Bambang Yudhoyono’s repeated statements on tax evasion over the past few days have raised suspicion and anxiety among politicians and business players who fear he may be pushing the wrong agenda.

The first statement was made at a National Police leadership meeting earlier this week, where Yudhoyono demanded the police “vigilantly” investigate tax evasion, which falls predominately under the jurisdiction of the tax office.

Yudhoyono made a similar statement on Thursday at the State Palace, saying that some business players bribed tax officials in order to pay less tax.

Politicians say the statements could be interpreted as a threat to Golkar Party chairman Aburizal Bakrie, whose family business, the Bakrie Group, owns shares in companies currently under the scrutiny of the tax office for possible tax evasion worth an estimated Rp 2.1 trillion.

Many allege the tax probe is being used as leverage to bargain Golkar’s position in the House of Representatives’ special Bank Century inquiry committee.

On Wednesday Aburizal said his party would not back down from investigating possible legal violations in the Century bailout.

“I have never given a threat, but never try to threaten me,” Aburizal said firmly.

Business players, on the other hand, fear the President’s statement was a nod to increase the level of police involvement in tax investigations, an agenda that had been pursued by the police for years.

The Indonesian Police force is known for its bad reputation, which include the extortion of victims and perpetrators of crime.

Two chairman from the Century inquiry committee said it was unwise for the President to make such statements when the committee had just issued preliminary conclusions on the Century probe. Seven of nine parties in the committee said the bailout was riddled with violations.

“As the statement was made at the National Police headquarters it could encourage negative interpretations,” said Mahfudz Siddiq from the Prosperous Justice Party.

Mahfudz also said that some committee members were currently being investigated by the tax office, but refused to name names.

Gayus Lumbuun from the Indonesian Democratic Party of Struggle said the committee would not be affected by the tax probe into companies partly owned by the family of Golkar’s chairman.

Gayus also warned that greater police authority in tax probes would be detrimental to the investment climate and economy in general.

Indonesian Employers Association chairman Sofjan Wanandi voiced similar concerns, saying that many business players feared the police would abuse their power in probing alleged tax evasion.

“If the threat was aimed at Bakrie, it is us who actually feel the pinch,” he said.

Chris Kanter, a deputy chairman of the Indonesian Chamber of Commerce and Industry, said the President’s statement at the police headquarters was “fatal” and very discouraging to business players.

The President’s spokesperson could not be reached for a comment on the issue.

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