Page 13 - Working Paper (Tax Policy Options during Economic Downturn)
P. 13

DDTC Working Paper 1315

                                                      Table 5 - Tax Strategies 2016
                    No   Strategies

                      1  Improve tax payers’ compliances mainly individual and firms.
                      2  Leverage tax ratio and tax buoyancy through expansion, intensification, stringent enforcement, better tax administration,
                         improve regulation and capacity of DGT.
                      3  Expand tax coverage on several primary sectors such as mining, quarrying, trade, construction, and financial services.
                      4  Strengthening and widening tax data base, through:
                         a) Digitalization of SPT and implementation of e-SPT & e-filling
                         b) Implementation of e-tax invoice throughout Indonesia.
                         c) Implementation of cash register and electronic data capturing (EDC) on line with tax administration;
                         d) Synchronization data collection from other institutions.

                    Source: Nota RAPBN, 2016

                                                                             The composition of taxes and government
                      There is also a possibility to further optimize
                                                                          spending  are   important  determinant
                   the tax regime, improve corporate income
                                                                          for economic growth.  Furthermore, the
                   taxation, and revise value-added tax exemptions to
                   increase equity . Government policies to eradicate     government should also made bold and firm
                                                                          decision to restructure the real sector of the
                   tax  evasion need  to be strengthened without
                                                                          economy including on how to improve the
                   jeopardizing  business  environments. It  is clear
                                                                          licensing system, the level of investment and
                   enough to conclude that  Jokowi administration’s
                                                                          the business climate. There are also  other
                   main priority based on the recent economic policies
                                                                          policies that provide a financial incentive for
                   package is  to support private consumption and
                                                                          the promotion of exports or reduce interest
                   export, improve fixed investment growth to drive
                                                                          rates to lower costs. At present, the lending
                   Indonesia’s slowdown, and speed up government
                                                                          rate in Indonesia is the highest among the
                   investment  through  line  ministries  and  state-
                                                                          ASEAN  5  countries.  The  labor  market  is
                   owned enterprises (SOE). This will, eventually, have
                                                                          distorted as the government has kept raising
                   a positive impact on the government tax receipts.
                                                                          the minimum wage and provided generous
                   However, the effectiveness of that package is still
                                                                          unemployment  benefits  in  a  labor  surplus
                   questionable as public still waits for the detailed
                                                                          economy .
                   policy actions to execute that package.
                                                                             For  tax  strategies,  it should  take into
                   4. Conclusion and Policy                               account  that  decreasing personal or
                                                                          corporate income  tax  than consumption
                   Recommendation                                         tax  can  have  better  effects  on  long-term
                      4.1 Conclusion                                      growth . There are other factors that need
                                                                          to be considered, such as revenue sufficiency,
                            In  the  aftermath  of  AFC  and  GFC,        equity, simplicity, and compliance . In
                         emerging economies  including Indonesia          essence,  there  is  a need  to  identifying  not
                         again stands at a crossroads  of  global         only policies that are fast generate domestic
                         economic volatilities due to the weakening       demand, but  also policies that  are fast  to
                         of  China’s  economy;  a  growing  probability   enact  and involving fewer administrative
                         of an interest rate rise in the US that could    and political processes  to implement. The
                         create short-term portfolio flows; plunging      removal  of  tax  barriers  which  hamper the
                         world  commodities  prices  such as oil and      effective functioning of financial and goods
                         gold;  and  lingering  economic  problems  in    market can help countries  exit from  the
                         the  European  Union.  Ideally,  developing      crisis.  This  would include tax provisions
                         countries’ governments should respond by         which distort investor choices as to whether
                         providing  large  fiscal  stimulus  programs     to invest directly or by means of collective
                         related  to public spending,  subsidies,  and
                         tax policies (e.g. tax incentives) that helped
                                                                    31. Nasution, Anwar (2014),”A Deteriorating economy amid distorted
                         the region out of the crisis. Fiscal policies,   policies”, the Jakarta Post.
                         such as taxes and public  expenditure, are   32. Abdon, A., Estrada., GB., Lee, M., and Park, D.(2014),”Fiscal Policy
                         used  to  counter-cyclically  purposes  and   and Growth in Developing Asia”, ADB Economics Working Paper Series,
                         stabilize the economy.
                                                                    33. Arnold, J. M., B. Brys, C. Heady, A. Johansson, C. Schwellnus, and
                                                                    L. Vartia. (2011),”Tax Policy for
                   30. See Indonesian Development Policy Review,”Avoiding the Trap”, The   Economic Recovery and Growth”, the Economic Journal. 121 (February).
                   World Bank, 2014.                                pp. F59–F80.
   8   9   10   11   12   13   14   15