Shaping the Tax Landscape Through Journalism

By Andrean Rifaldo, the Directorate General of Taxes officer

In 2022, a revelation struck the Indonesian fiscal landscape. The Indonesian Survey Institute laid bare a chilling reality: a mere 50% of the populace didn’t understand taxation at all. As the nation grapples with this dire state of affairs, the ominous specter of a feeble 10.9% national tax ratio looms large. This number is far below the Asia-Pacific average of 19.8%.

In confronting this challenge, it becomes apparent that journalism plays a pivotal role in advocating tax compliance. During the Asia Media Summit held last May, Vice President Ma'ruf Amin emphasized that, "The press is a bridge of communication and information in public education."

The mutualistic relationship between tax authorities and the media industry presents a unique and invaluable opportunity to cultivate a culture of tax inclusion. In 2021, a survey by the Organization for Economic Cooperation and Development (OECD) found that this synergy effectively enhances tax compliance in 46 out of 59 observed countries.

Let's take Estonia as an example. A mass media campaign thanking the taxpayers’ contribution successfully captured the public's attention for five years. Meanwhile, Australia's decision to advertise taxation led to a 15.2% growth in tax revenue compared to the preceding year.

Drawing parallels, Indonesia employed a comparable strategy during the 2016 Tax Amnesty Program. Through a concerted effort involving advertorials and extensive media coverage, the program achieved remarkable success, yielding fiscal revenue amounting to Rp130 trillion from the declaration of assets valued at Rp4,884 trillion.

Unveiling Avoidance

Beyond mere public education, journalism assumes a profound role in shaping tax compliance, often unveiling the intricate dynamics of tax avoidance that impact national economies.

A landmark instance a decade ago, in April 2013, saw the International Consortium of Investigative Journalists (ICIJ) release the Offshore Leaks report. The report laid bare the concealment of wealth in 130 thousand accounts across various tax havens.

The investigation lifts the veil on the world of tax havens, revealing its secrecy and those who misuse it. The report quickly garnered international reactions, evolving into the most extensive tax evasion disclosure in history. It highlights the pivotal role of investigative journalism in the fight against tax evasion.

The challenge of tax avoidance remains a critical factor contributing to Indonesia's persistently low tax ratio. The State of Tax Justice 2023 report highlights Indonesia as one of the countries grappling with substantial annual tax losses, amounting to Rp40.9 trillion.

The noteworthy revelations stemming from a decade-long series of tax investigations initiated by Offshore Leaks, namely the Panama Papers (2016), Paradise Papers (2017), and Pandora Papers (2021), illuminate the remarkable capacity of investigative journalists to unveil 36.8 million documents exposing various forms of tax avoidance practices.

Furthermore, investigative journalists play a crucial role in shedding light on corporate entities exploiting legal loopholes to circumvent tax obligations. A compelling instance occurred in 2019 when a foundation in the United Kingdom uncovered persistent tax debt avoidance actions totaling over $100 billion by six giant multinational technology companies.

These exposes served as catalysts for significant regulatory improvements and cross-government cooperation. In the European Union, the fallout from the Pandora Papers case has precipitated amendments to the Renew Europe, reinforcing tax oversight mechanisms and recognizing the indispensable role of investigative journalism and press freedom in bolstering these efforts.

Supporting the Industry

Despite its crucial role, the journalism industry confronts substantial challenges. Amidst demanding work schedules, the Independent Journalist Alliance in 2021 found that 93.8% of journalists still did not receive adequate compensation.

Implementing various tax incentives can support the journalism industry. Providing tax credits, as in Canada, can alleviate the tax burden on journalists' income. Meanwhile, in France, special tax discounts for newspaper subscribers have successfully revitalized the local print media industry.

Similar initiatives have been undertaken in Indonesia, with the introduction of tax relief incentives and the exemption of value-added tax (VAT) on newspaper purchases in July 2020. Unfortunately, these policies were part of pandemic-related fiscal stimulus packages and are no longer in effect.

Now is the time to revitalize tax incentives for the journalism industry. Tax policies designed to provide relief can bolster the journalism industry's development, fostering independent and high-quality journalism.

A notable example arises from the state of New York, United States, where a proposed tax credit policy aims to rescue the local print media industry over the next five years. This initiative is anticipated not only to mitigate declining revenues but also to generate more substantial job opportunities for journalists.

Hence, the work of investigative journalists, crucial for uncovering issues like tax avoidance, is not always met with universal acclaim. The Tax Justice Network advocacy group revealed that journalists involved in the Panama Papers investigation faced threats and restrictions.

To safeguard investigative journalism, it is imperative to ensure freedom and legal protection. The National Law of the Republic of Indonesia Number 40 of 1999 on the Press stands as a legal safeguard, affirming the freedom of press organizations and journalists.

In fostering a supportive environment through collective efforts, journalists can effectively carry out their crucial role in overseeing tax compliance while upholding a high level of independence. This underscores the symbiotic relationship between a thriving journalism industry and the health of taxation landscape.

*) This article represents the author's personal views and does not represent the stance of the institution.

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