The latest data on individual income-tax payers, as revealed by Tax Director General Darmin Nasution last week, was not only shockingly small, but also strikingly contrary to what had been reported by his predecessors.

We assumed, based on the official reports of his predecessor Hadi Purnomo, that Darmin now manages at least 10 million registered individual income-tax payers, of which almost seven million were netted under a massive campaign in 2005.

However, Darmin put the number of registered income-tax payers last week at a mere four million. Even more disappointing is only 33 percent or 1.32 million of them filed their annual tax returns – the other 2.68 million were classified as non-filers.

Purnomo, instead of waiting for people to voluntarily register themselves as income-tax payers, conducted a massive, property-based taxpayer registration in 2005 by sending taxpayer registration numbers to people residing in middle and high-income housing complexes in Jakarta and its surrounding suburbs.

There is nothing wrong with these tax-collection initiatives because people will hardly voluntarily register themselves as income-tax payers. The tax office could register as many new taxpayers as it likes and put them in their data base.

But what is then the meaning of such an effort without vigorous collection efforts and strong law enforcement? The taxpayer data would be meaningless. It would fail to broaden the taxpayer base if law enforcement remains quite lax and the institutional capacity of the tax administration is not improved.

It was even quite a painful surprise to learn from Darmin's disclosures that five years ago, the number of taxpayers who regularly filed their tax returns was still as large as 35 percent of the total registered taxpayers.

What happened to the seven million new taxpayers registered in November, 2005 through their property and car ownership and credit cards? Why had they not filed annual tax returns.

Even assuming about 50 percent of the new taxpayer registration numbers recorded in 2005 might have been mistakenly issued to ineligible people – those who already have taxpayer registration numbers, or the ones whose income is still below the taxable income level – the number of income-tax returns filers should have still reached at least five million.

Darmin suspected one of the reasons behind the high number of tax non-filers was taxpayers' utter disillusionment with tax officials, who unfortunately are still perceived to be among the most corrupt civil servants in the country.

He said his officials would not immediately take repressive measures against the non-filers but would first conduct a persuasion campaign and look into their real economic condition to ascertain what was the real factor behind their hesitation to file their annual tax returns.

Certainly, newly-registered taxpayers have still to be encouraged to voluntarily comply with their tax obligations by regularly filing their tax returns. Taxpayers should be educated to understand that filing tax returns is not a complex process nor a costly exercise. They should be adequately briefed that filing annual tax returns should not require the payment of any amount of income tax if their tax self-assessment concludes they have not any taxes due to the state. Still, they have to file the tax returns.

There should have been many things extremely wrong with our tax law enforcement if today, five years after the massive reform of the tax administration, only 1.32 million taxpayers have regularly filed their annual tax returns and only about four million individual income-tax payers have been recorded in the tax directorate general's data bank

True, tax compliance based on the willingness of taxpayers to pay taxes is also influenced by their perception of the integrity of tax officers and the government's credibility with regard to governance practices in general. Taxpayers may be discouraged to file tax returns if they face uncertainties about legal tax matters, or they notice the incidence of corruption within the public administration remains extraordinarily high.

However, voluntary tax compliance also will increase if the cost of tax evasion and non-filing tax returns is very high. More people will fulfill their tax obligations if they know the chance of being caught by tax officials and auditors is high. But this environment requires a strong law-enforcement system and a higher tax administrative capacity to collect taxes and audit taxpayers.