JAKARTA, Oct 21: Tax amnesty has worked little so far to recover or bring back money already stashed from the developing countries.This has been the consensus of views, expressed by experts, civil social members and activists from around the world, attending the Sixth Financial Transparency Conference in the Indonesian capital.
Although sometimes tax amnesty may be considered the 'second best option', it has a large cost, they broadly agreed while noting that tax incentives have mixed experiences as these are considered as investments by the governments.
The participants in the conference on Wednesday called for rationalising tax incentives and making the incentives transparent.
Taking part in discussions and debates on the closing day of the conference titled 'Many Voices, One Purpose’, they also urged the governments to support open data initiative, a move to make access to relevant data easier and cheaper.
Financial Transparency Coalition (FTC), a global platform to fight illicit financial flows, along with Prakarsa, an Indonesian development organisation and Transparency International Indonesia, jointly organised the conference in Jakarta.
In his keynote address on the closing day of the conference, Governor of Jakarta Mr Ahok Basuki Tjahaja Puranma explained his different initiatives to make the provincial government activities transparent and check corruption.
"Corruption is the number one problem in this country and to check corruption, transparency is a must," added Mr Ahok. "If you are transparent and don't take bribe, you can work to uproot corruption."
The governor of Jakarta stressed the need for use of information technology to help make the government activities transparent. He also mentioned the e-budget process, being followed by the metropolitan government in Indonesia’s capital city, and the uploading procedures of meetings in YouTube so that people could find what decisions were taken and how.
In the first plenary session of the day, the speakers focussed on challenge of rising revenue in an 'age of tax incentives.'
A researcher of Action for Economic Reforms, Anton Ragos said that governments usually considered tax incentives as investment and expected to get return in future.
" Incentives are required to attract investment but revenue foregone for this purpose should be calculated," he added.
Setyo Budiantoro, executive director of Perkumpulan Prakarsa, said that tax incentives had no significant impacts on the inflow of foreign direct investment (FDI).
He also said the  Indonesian government has now drafted tax amnesty act but feared that it would not be beneficial.
On the sideline of the sessions, Alvin Mosioma, executive director of Tax Justice Network in AFrica told the FE correspondent that tax amnesty might work if it was designed carefully, but it was also difficult to do so.
He further observed that there was a trend about return of stashed money to the country of origin in the form of FDI. "On one side, businesses evade taxes in the home country and illegally transfer the funds to tax havens and they, on the other, bring back some of stashed funds, including those in the form of FDIs, to get tax incentives," he added.
Around $1.0 trillion is annually stashed away from the developing countries.
In the last plenary session, Tove Ryding of European Network on Debt and Development dwelt on the dual policy of the developed countries regarding illicit financial flows.
"Switzerland provides Swiss banks' clients’ information to the United States as the US is a big market for the country," she said. "But the Swiss government isn't interested to talk about this with African countries like Malawi and other poor ones."
Meanwhile, participants from more than 25 countries called for global cooperation to contain illicit financial outflows and greater transparency in the formal closing statement of the sixth financial transparency conference.
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‘Tax amnesty works little to recover stashed money’, experts
Asjadul Kibria | Published: October 22, 2015 00:00:00 | Updated: October 22, 2015 13:19:37
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