Indonesia will miss the opportunity to attain a tax-based economy if it fails to address the main problems of complicated tax laws and tax officials with questionable integrity, analysts say.

"The devil is in the details, in the fine print of the tax laws," economist Faisal Basri of the University of Indonesia said at a seminar on tax reform on Tuesday.

"Gray areas of tax law articles, which are still open to interpretation, should be reduced. Any planned tax reform should not be patchwork but total reform, including of the tax office," he added.

Rosediana Suharto, a business association representative, gave an example of one gray area, in which agricultural products exempt from value-added tax (VAT) were vaguely defined as "crops which are directly harvested", leading to different interpretation by tax officials.

"If latex is directly collected but immediately treated for better storage, is it then subject to tax?" she asked.

It was only after the Ministry of Agriculture submitted a more specific definition for the draft tax law amendments that the matter was made clear.

The government submitted to the House of Representatives the revision to the laws on general taxation arrangements and procedures, income tax and VAT for deliberation, which will be the third major tax reform since 1983, if approved.

The government expects to rake in Rp 416.3 trillion (US$41.63 billion) in tax revenue next year, up from Rp 351.9 trillion this year. It also aims to raise the tax base to 19 percent by 2009, from some 13 percent at present.

With only some three million taxpayers, Faisal acknowledged the need for a larger tax base for a better economy, but understood the public's reluctance to comply.

"Taxpayers' expectations are actually simple: that tax regulations be clear and tax rates competitive. If these are fulfilled, then the tax base, tax revenue and the business climate will improve, attracting more investment," he said.

A recent World Bank survey shows that businesses in Indonesia spend more than twice as much time on tax matters and make twice the number of tax payments than the Asian average. They also pay an effective rate of 38.8 percent as compared to the region's 31.2 percent average.

"No wonder many don't want to get more of a headache by dealing with taxes. There is also a lack of incentive-based persuasion in tax reform, and instead more draconian power is being given to the tax office," Faisal said.

Concerning calls to include an amnesty for tax evaders to encourage them to register as taxpayers, chairman of the House's finance commission and deliberation team, Paskah Suzetta, said the House would give the government until the end of November to submit such addenda.

"If by then the government has not submitted any, the House can use its initiative," he said.

Faisal, however, warned the lawmakers to avoid creating a possibility for the tax amnesty to be taken advantage of, which would jeopardize the whole essence of tax reform. "It should firmly remain what it is called: a tax amnesty, not a corruption amnesty.".