UNAIR NEWS – Indonesian policy to normalize state economy with tax amnesty is not the first time implemented. In history, Indonesian government has implemented tax amnesty program three times, in 1964, 1984 and 2016. The objective was to maximize state revenue through taxes.
In 1964, Indonesian government wanted to return the revolution’s fund to the state treasury through tax amnesty. In 1984, there was an oil crisis, so the government has to maximize revenue from other sectors such as taxation. In 2016, the program was implemented to cover the deficit of state treasury.
In 2016, although the tax amnesty was calculated in the revision draft of state budget 2016, there is still deficit. There was Rp 296.723 trillion deficit or about 2.35% from the gross domestic product.
Professor of Political Economics, Faculty of Social and Political Sciences (FISIP) Universitas Airlangga, Prof. Kacung Maridjan, Ph.D, said that the government’s ability to collect taxes decreased so the program was expected to stimulate the economic growth.
“It is a phase of taxation reformation, especially to record our taxpayers’ potentials. As of now, there are only 18 million of Indonesian population have tax identification numbers (NPWP), compared to the total population which should have NPWP. Second, to repatriate fund invested out of the country to accelerate economic growth. Third, the state still has deficit on the budget,” said Prof. Kacung.
“The enthusiasm towards tax amnesty was great, especially in the last two weeks. The fund declared has almost reached half of the target. It is possible to reach Rp 2,000 trillion by the end of the week. But repatriation is quite low. I could see that the policy was half-heatedly implemented. Half failure in regards of 10% repatriation and the redemption fund is still at one third,” said Prof. Kacung.
As a phase of taxation reformation, tax declaration was targeted to reach Rp 4,000 trillion while repatriation reaches Rp 1,000 trillion. To cover the deficit, the target is 165 trillion. According to the data as of September 26, 2016, the trend is positive towards tax amnesty.
On September 11, 2016, tax declaration was at Rp 174 trillion, repatriation was 18.6 trillion and the redemption payment was at Rp 8.53 trillion. As of September 26, 2016, the declared tax reached Rp1,849 trillion, repatriation reached Rp94.5 trillion, and the redemption payment was Rp56.1 trillion.
If the deficit reached three percent of gross domestic product then the president could face impeachment. To avoid it, two things the state can do, to cut the ongoing budget and borrowed funds abroad.
“If the deficit reached three percent of GDP, there would be political chaos as the president had violated the law. The president could be impeached even now the political parties support the presidents,” explained Prof. Kacung.
According to Prof. Kacung, tax amnesty does not consider fairness as the state pardons disobedient taxpayers who do not report their taxes. But it was deemed the best measure to achieve target of the state income.
“Yes, it is unfair. It means the disobedient and the obedient are equal. It will be even more unfair if the state let those people evade paying taxes. I think the state has decided a measure which won’t let the unfairness go further. So there should be a policy which can decrease the number of those evading taxpayers. Finally they are pardon with discretion,” said Prof. Kacung.
Author: Defrina Sukma S.
Editor: Nuri Hermawan