If the Indonesian government wants more people to pay tax it should improve public services and stop tax evasion by the rich
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Simon Butt
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Purify your thoughts, fix your behaviour and let’s build this country
togetherKPP (Kantor Pelayanan Pajak) Pratama Jakarta Jatinegara |
Taxation revenue comprises only around 13 per cent of Indonesia’s Gross Domestic Product (GDP) and only 14 per cent of Indonesians are registered to pay tax. In comparison, Australian tax revenue runs at 30 per cent of GDP and in Sweden it is 48 per cent; nearly all adults are registered taxpayers in both countries. Though Indonesia’s low figures can be partly attributed to its very large informal economy, significant revenue is lost through tax evasion by the rich. Simon Butt spoke about some of Indonesia’s tax problems with Yanuar Rizky, analyst and managing partner of Aspirasi Indonesia Research Institute (AIR Inti) and advisor with Indonesia Corruption Watch.
Why is tax revenue so low in Indonesia?
Indonesia’s tax revenue has not increased at the same rate as its economic growth, which shows that the system does not work properly. There are several reasons for this. One is that the system requires self-assessment and many people and businesses underreport their tax liabilities. Another reason for the failure of the system is that the tax office often fails to detect tax evasion, so lost tax revenue is very rarely identified, let alone recovered.
The tax office
