Thousands rally in Indonesia against tax amnesty scheme
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Thousands rally in Indonesia against tax amnesty scheme

THOUSANDS of workers staged a mass rally in the Indonesian capital of Jakarta Thursday against the controversial tax amnesty scheme launched by the government to fill federal coffers.

According to detractors from workers unions and social justice groups, while the scheme may raise revenues for Indonesia, it would allow wealthy tycoons who have stashed their riches abroad to dodge tax obligations.

A report by AFP quoted Said Iqbal, president of the Indonesian Confederation of Trade Unions, as claiming that the policy would even allow criminals to declare their illicit assets abroad.

“These funds coming in could be dangerous and from corruption, trafficking or drugs, and we are opposed to that,” he was quoted telling reporters during the march to the presidential palace in Jakarta.

SEE ALSO: Don’t worry, Jakarta tells tax amnesty applicants flagged by Singapore banks

Reuters quoted Said as saying that apart from Thursday’s protest, other rallies may be held.

He added that workers may also consider going on strike if the government decides to continue the amnesty program.

The report said Said’s union and three other groups have filed legal action against the program at Indonesia’s Constitutional Court. The ruling is not expected for weeks, however, and could possibly become a blockade to the government’s ambitions.

The Jokowi administration rolled out the controversial tax amnesty program on June 28 in a bid to offset an impending budget shortfall on the back of sluggish economic growth and poor annual tax collection rates.

The government hopes that the program would help it raise IDR165 trillion (US$12.7 billion) in 2016, which would help it keep its budget deficit in check, below the legal limit of 3 percent of the GDP.

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Indonesians register their earnings for the government’s tax amnesty at the tax office in Jakarta, Thursday, Sept 29. Pic: AP.

Under the program, Indonesians are offered low penalty rates for assets abroad or at home that were not previously declared. A previous Bloomberg report said the rate changes in stages, beginning from 4 percent for declared assets that taxpayers choose to leave overseas, and up to 10 percent as the program draws to a close in March 2017.

Those who agree to repatriate their assets for a minimum three-year period are offered a rate of just 2 percent, as well as investment opportunities.

The first phase of the program, which offers the lowest rates on the undeclared assets, ends Friday.

According to Reuters, almost US$200 billion worth of assets have been declared so far under the program.

The over 100,000 participating include some of Indonesia’s wealthiest, like tycoon-politician Aburizal Bakrie, Lippo Group chief executive James Riady, and Hutomo Mandala Putra – a son of the late authoritarian president Suharto, the report said.

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