Tax amnesty opens door to tax reform

The Jakarta Post – Jakarta.Financial distress has prompted the government to find ways to guarantee fiscal sustainability through tax reform, a Centre for Strategic and International Studies (CSIS) economist has said.

The fiscal deficit reached 2.36 percent of gross domestic product (GDP) in 2015 from 1.91 percent the previous year due to a higher revenue shortfall, said Yose Rizal Damuri, the CSIS department of economics head.

“The deficit would be wider if the tax amnesty was not successful this year. It would be a problem because it would mean that the gap between government revenue and expenditure had become larger,” Yose said in a seminar on tax reform in Jakarta.

He added that when a country consumed more than it produced and earned, it resulted in a deficit. The nation has to finance its excess consumption through more and more debt, Yose said.

“With a risky fiscal situation, tax reform is needed,” he told the audience.

Heru Iswahyudi, an international tax regulation analyst from the Directorate General of Taxation, said the tax amnesty was a solution for tax reform.

“One of the goals of the tax amnesty is to support tax reform and to widen the tax base for future tax collection,” he said.

Another way to accelerate tax reform is through government efforts to prioritize the deliberation of proposed laws on the tax amnesty, which include the general taxation system, income tax and value-added tax, he said. (win/dan)