Tax is a common phenomenon as a beginning of province gross. For the states in the universe, revenue enhancement is an of import component, and even the most of import in order to back up the province gross budget. The research consequences showed that about all states in the universe impose revenue enhancement on citizen, except for a few states rich in natural resources as the chief beginning of gross for provinces that do non enforce revenue enhancement. For most underdeveloped states, revenue enhancement is the chief beginning of province gross. Without revenue enhancement, the huge bulk of province activity is hard to be implemented. The usage of revenue enhancement screens from forces outgo to finance assorted development undertakings. Tax is besides used for funding in order to supply safety for the whole society. Every citizen from the birth to decease take pleasance in the all authorities installations that are funded by revenue enhancement. It is clear that the function of revenue enhancement gross for a state to be really dominant in the authorities support and support development to accomplish independent state. Specifically about that is reflected in the statement of Jeffrey Owens, Director of the Centre for Tax Policy and Administration OECD: “ Tax is the pillar of every market economic system. Tax provides needful income for the economic investing in the hereafter. Tax makes authorities has responsible to citizen, and nexus between authorities service and citizen engagement. In this context, Tax grows as the foundation for the authorities and go the chief component for developing states to mobilise domestic grosss for development by cut downing of dependance on debt ” .
Research in many developing states late has besides showed that revenue enhancement can play a cardinal function in the development and sustainability of the province and society power. It seems the two rules, the infliction of revenue enhancements as a dialogue procedure based on the societal contract ( revenue-bargaining policy ) will advance participatory democracy and institutional development to beef up the province ‘s capacity to implement its maps optimally sourced income revenue enhancement. Supporting of the revenue enhancement execution, by and large every state makes the regulations and ordinances in enforcing and roll uping of revenue enhancement that follow the rules or norm in revenue enhancement. For illustration, fairness facet, comfort for the taxpayer, relative sum, efficiency, effectivity and relaxation to roll up administratively, and so forth.
Based on the theory, revenue enhancement is direct and indirect support enforced by the public power to the people or goods to cover province outgo ( Trotle de la Science des Finance, 1906 ) . Tax is imposed dues one-sidedly that is collectible to the governments ( harmonizing to the general norms ) without direct benefit and entirely used to cover disbursals ( Dr. Feldmann NJ ) , so revenue enhancement is the people ‘s dues to the exchequer based on statute law ( which can be enforced ) by non acquiring mutual services straight demonstrated, and used to pay for general disbursals ( Dr. Rochmat Soemitro, SH ) . While General Provisions and Tax Procedures ( Indonesia Law ) No. 28 of 2007 said that the revenue enhancement is compulsory part by a transportation of resources to the populace sector under irresistible impulse that nonexempt with revenue enhancement ordinance without reception of a specific benefit of equal value, in order to carry through some of a state ‘s economic and societal aims for overall prosperity to the people. Harmonizing to the theory, we can reason that ( 1 ) revenue enhancement is withheld with the power of the statute law and its execution regulations, ( 2 ) taxpayer can non acquire the direct benefit, ( 3 ) revenue enhancement is collected by authorities under irresistible impulse, and eventually ( 4 ) revenue enhancement is used to the authorities outgos and fund development activities in order to the greatest prosperity. Other theories underlying revenue enhancement aggregation are theory of insurance, involvement, absolute liability or devotedness, buying power, and balance. These theories become the counsel of revenue enhancement aggregation in many states including Indonesia.
In Indonesia, the revenue enhancement has been known since 100s of old ages or a thousand old ages ago. The revenue enhancement construct at that clip was different from the present. In the yesteryear, the revenue enhancement is a transportation of belongings under irresistible impulse used to beef up the colonial power, today, since the Indonesia independency in 1945, the revenue enhancement is a determination based on the rules of democracy in order to follow with people involvements. As a state that has the intent to contrive prosperity, Indonesia has the responsibility to vouch the budget to fund all official activities and plans such as instruction, wellness, safety and others set out in the State Budget of Revenue and Expenditures. Therefore, revenue enhancement aggregation, which has map as province gross, becomes really of import. In add-on, revenue enhancement besides has map as regulator in which revenue enhancement directs or is used as a tool to modulate the allotment of economic resources, stabilisation, and income distribution from assorted community groups so that the national kineticss can continue as expected. For illustration: giving revenue enhancement inducement to pull investing from both domestic and foreign, revenue enhancement vacation, and revenue enhancement import to protect domestic production.
In running both the revenue enhancement maps, there are three of import elements that influence. The first component is the revenue enhancement policy, which is a set of Torahs that govern how revenue enhancement is collected and regulated. The 2nd component is an establishment as aggregator, in this instance of Directoral General of Tax in charge of implementing the assemblage of revenue enhancement grosss from all sectors. The 3rd component is the taxpayer as a topic and nonexempt object. If one of those elements is non running, the national revenue enhancement system will non travel good. Therefore, these three elements become the authorities focal point in the revenue enhancement direction.
As the consequence of the revenue enhancement activities, this sector becomes a major subscriber to the province grosss with rise part continuesly until more than 70 % of the entire budget in 2012. Although as absolute the revenue enhancement is the largest gross, but when compared with other states, the income revenue enhancement in Indonesia is still considered little. This is evidenced when the revenue enhancement gross compared to the Gross National Product ( GDP ) , or the revenue enhancement ratio, its value in 2012 was merely about 16 % . With this per centum, based on a World Bank study, Indonesia is still in the low-income states ( per capita income of less than $ 400 ) , as shown in the undermentioned tabular array:
Table 1. Percentage of Tax Revenue on GNP in many states
Tax Ratio to GNP
Low-income Countries ( Per capita income of less than $ 400 )
Middle to under-income states
( Income per capita between $ 400 – $ 1.600 )
Middle to above-income states
Beginnings: World Bank Report
Comparing to 240 and 110 million of population and labour force including about 22.6 million registered companies, Indonesia has a great potency to derive greater revenue enhancement gross. Therefore revenue enhancement system betterment is still conducted continuesly by rating and completed policy including follow the societal life and province economic development through revenue enhancement reform plan.
Tax reform is fundamentally an betterment towards a better revenue enhancement. Reform requires a alteration to a new paradigm that is considered ideal harmonizing to alterations in all Fieldss of life including political, economic and societal. Tax reform involves two facets viz. policy preparation in the signifier of ordinances and execution of the policy because revenue enhancement aggregation are non separated from its ordinance ( Rahardjo, 2009:56 ) . The spirit of revenue enhancement reform is implemented by doing cardinal alterations in all countries of revenue enhancement which at least screens the quality of human resource, revenue enhancement ordinances, revenue enhancement and service information system, with the chief intent of increasing voluntary conformity, assurance in the revenue enhancement disposal, and the high productiveness of the revenue enhancement officer. In the United States, the phase of the Tax Reform Act ( TRA ) will ever predate a study by the IRS ( Internal Revenue Service ) to cognize the public response towards the effectivity and efficiency of the running revenue enhancement system. In this stage, the populace was given the widest chance to knock the failings of the system, with the purpose of these points become the design for the following phase, while in Indonesia the revenue enhancement reform is an effort to set ordinance revenue enhancement with the tendency of economic developments under sing the aspirations of the people.
In Indonesia, Generally, revenue enhancement reform was implemented in 2 stages. The first stage was began in 1983 until 2000 by issued of the policy to alter official appraisal system with self-assessment, which is a system that gives trust to the taxpayer to cipher, study and pay their ain revenue enhancement duties. Execution of the system is supported by the publication of a set of revenue enhancement ordinances that are more simplicitiy, impersonal, equity and legal certaity. In add-on, the first phase of reform besides include on facets of reorganisation, heightening of employee Numberss and expansion of the line processs. In the consequence, construction of gross province has shifted in recent decennaries from oil and gas grosss to the revenue enhancement gross. Increasing the map of province gross from revenue enhancement sector showed a important sum in each financial twelvemonth with an mean addition of 17.04 % as listed in the undermentioned tabular array:
Table 2. Tax Gross of 1983 – 2000
Tax Gross ( in Trilyun )
Beginning: analysis of research
Although revenue enhancement gross attains about 26 times the sum since the first reforms released, the failings still happened. Reform activities in 1983, 1994, 1997 and 2000 have proved they did non changed an organisational construction to be slender because of still concentrating on the reorganisation to enlarge the construction, increase the employees and widen the process. Then the alteration from the official appraisal system to self assessment brands revenue enhancement officer lost contact to taxpayers. Although its intent to cut the manner of conniving contact, but the impact on province gross is really important where the taxpayer tends to describe his concern understatement of income or exaggeration of tax write-off. In add-on, unreadiness substructure and unavailable of good database supported by still corruptness civilization made the first phase of reform run to be unexpected.
On the 2nd phase of revenue enhancement reforms. The authorities attempted to better the revenue enhancement disposal system with increasing of the employee unity, substructure betterments, wage. In this stage, bit by bit, the Directorate General of Taxation ( DGT ) as the regulator and revenue enhancement aggregator, fix itself to be the best theoretical account of a public establishment into a universe category establishment system. The 2nd stage of reform began in 2001, when the Directorate General of Taxation issued a design of policy for the following 10 old ages ( 2001-2010 ) with the undermentioned stages: ( 1 ) the constitution of regional offices and Large Tax Office/LTO ( 2002 ) , ( 2 ) Modernization regional office, e-payment, e-registration, e-filing ( 2004 ) , ( 3 ) constitution of a undertaking force for the informations processing centre, e-Taxation, taxpayer intensification and extensification ( 2005 ) and ( 4 ) Modernization DGT ( 2006 ) , ( 5 ) Modernization of the all regional offices in Indonesia, preparation of in-between revenue enhancement office at each regional office including Batam part and unit of centre processing and information direction, execution of public presentation and modern human resources direction ( 2007 ) , and ( 6 ) Constitution of Small Tax Office for all country in Indonesia ( 2009 ) . This 2nd stage of revenue enhancement reform had besides raised the revenue enhancement gross with the mean growing of above 14 % as the information in the undermentioned tabular array:
Table 3. Tax Gross of 2001 – 2010
Tax Gross ( in Trilyun )
Beginning: analysis of research
Overall, the procedure of revenue enhancement reform in Indonesia includes 4 dimensions of reform in conformity with the theory Caiden ( 1991 ) , viz. :
Reform the organisational construction
The constitution of the organisation based on map
Formation of the specification undertakings and duties include:
1 ) Forming of Account Representative ( AR ) that has specific undertaking to function and oversee straight the taxpayers in order to follow with their duties
2 ) The revenue enhancement audit is merely done by trained hearer with allotment appropriate to the degree of audit hazard and it is besides conducted proficient preparation to back up professionalism of hearer based on the concern group of Taxpayers ;
3 ) Specialization of another employee as revenue enhancement seizor and information engineering coders.
Completing and polishing the execution of Tax Information System ( TIS ) become the Integrated Tax Administration System ( ITAS ) controlled by instance direction system in the monitoring of workflow system refers to the office mechanization including the services, supervising payments and audits with the procedure control, mandate, supervising and coverage designed in conformity with the ordinances.
Everyday monitoring through the Taxpayers’Account
Supplying lines for supervising and probe.
2. Reform of organisational process
Reform at this phase was started by the publication of a set of regulations, viz. Law No. 6 of 1983 about General Provisions and Tax Procedures, Statute No. 7 of 1983 about Income Tax, and Regulation No. 8 of 1983 about Value Added Tax/VAT to simplify old regulations and supply legal certainty to taxpayers. In the manner, this statute law was amended merely for certain articles in order to cover loopholes that could impair the province gross. After that the dimensions this measure is implemented through:
One-stop service through Account Representative.
Simplification of administrative processs and better the criterions of the clip, service quality and revenue enhancement audit. Activities conducted include ( one ) simplify the signifier of the study, ( two ) accelerate the completion of expostulation and entreaty on the revenue enhancement merchandises, ( three ) beef uping Tax Allowance to speed up the damages petition, ( four ) review the Taxpayer standards to cut down the damages petition, ( V ) reexamining the audit on each Notification Letter of Overpayment and accelerates damages Notification Letter of Overpayment that has low hazard, ( six ) the concentration of the Value Added Tax ( VAT ) .
Support of modern information engineering in supplying services, supervising, audit and revenue enhancement aggregation, in the signifier of: I ) ITAS is integrated with administrative map and process that have been set in the instance direction and workflow systems supported by e-system, particularly the e-Payment, e-SPT, and e-filing that helped rush, truth and security of the procedure of taxpayer disposal informations entering, two ) mechanization of the audit procedure with the aid of workflow direction in SAPT to avoid duplicate of informations, entering mistakes and supervising of audit process in conformity with the commissariats and besides supported by the application of Audit Command Language ( ACL ) , iii ) development of a informations bank in the construct of a national masterplan and cooperation in informations exchange with other establishment in order to accomplish informations transparence ; four ) mechanization of revenue enhancement aggregation through the ITAS so that processs of supervising and disposal of revenue enhancement delinquent can ever be done. Execution of claim conducted by seizor with difficult and soft aggregation method where soft aggregation can be done with the aid of Account Representative ; V ) execution of information engineering preparation ; six ) utilizing of information engineering and other e-system. In order to better the services, it is developed some applications such as e-Regristation, e-Counseling, Complaint Center, Help Desk, Call Center, Touch Screen supported Knowledge Base contains a Frequently Asked Questions ( FAQ ) , SMS revenue enhancement, and communicating channels and more intensive guidance through assorted tools such as telephone, electronic mail, web portal, entering and storage of paperss that is more dependable to utilize the Integrated Records Management System ( IRMS ) , support for modern office equipments that are complete, where each employee has a personal computing machine and entree information faster in both the internal and taxpayer where each of alteration in revenue enhancement commissariats that related to taxpayer will shortly be consolidated internally, interpreted and so instantly informed to the taxpayer.
3. Reform of the organisation ‘s scheme
Reform at this phase begins with alterations in the revenue enhancement aggregation system from the official appraisal to self-assessment. Then the reforms implemented through:
a. Campaign revenue enhancement consciousness and complience
b. Simplification of revenue enhancement disposal
c. Intensification of revenue enhancement gross, such as I ) execution of revenue enhancement audit to the peculiar industry sector that has still low conformity rate and / or the possible revenue enhancement can still be explored, two ) heighten the activity of condemnable probes in the field of revenue enhancement to supply a positive hindrance consequence ; three ) carry oning revenue enhancement aggregation through foreclosure taxpayer histories / Insurer Tax, bar, and hostage-taking ;
d. Develop internal mechanisms of quality control on the service and audit procedure, conduct the preparation about methods and first-class service techniques, and set up an effectual communicating system to acquire feedback.
e. Design, propose and recognize the demand for investing in connexion with the reorganisation and the application of modern revenue enhancement disposal system.
f. Reviewing the execution of the reorganisation, public presentation measuring, taxpayer satisfaction measuring, regular meetings and regular visits to acquire feedback. Completion Human Resources Management System such as using the revenue enhancement disposal public presentation measuring system, public presentation measuring unit formation, and the formation of an overview of the new compensation strategy in the signifier of allowances Additional Activities for revenue enhancement officer.
4. Reform of organisational civilization
Some reform activities of organisational civilization are:
Plan of good administration execution
Implementing the codification of behavior for all employees at the Directorate General of Taxation, forming of Ethic Code Committee, increasing the effectivity of supervising by the Inspectorate General of the Ministry of Finance, and collaborating with the National Ombudsman Commission ;
readying of qualified and professional human resources ( HR ) through execution of the tantrum and proper trial purely, puting staff appropriate to the capacities and capablenesss, reorganisation, sequence planning, preparation and development plan of ego capacity, wages and penalty, moral reform and moralss ;
Giving Extra Benefits Activity for revenue enhancement officer beside other benefits granted
Modern Office Facilities-based on engineering with the procurance of installations and substructure that meet the quality demands and that support the attempts to overhaul revenue enhancement disposal throughout Indonesia ;
From the description above, it can be concluded that the revenue enhancement reform provides increased revenue enhancement gross significantly, where the value continues to turn from twelvemonth to twelvemonth ( Tables 2 and 3 ) . In 2011 and 2012, the realisation of the revenue enhancement besides increased from 873.9 to 1,016.2 trillion ( accomplish the point above 1.000 trillion ) . For 2013, the authorities is aiming revenue enhancement gross carry through to 1178.9 trillion. With this Numberss, it is non surprising that the 72 % of the budget presently comes from the revenue enhancement gross. Meanwhile, the biggest subscriber to the income revenue enhancement over the last 5 old ages is private corporate/company taxpayers as listed in the undermentioned tabular array:
Table 4. Comparison of Tax Revenue from private company to Personal ( in millions of rupiah )
Tax of companies
Tax of Personal
Beginning: Ministry of Finance in 2012, processed
The success of the authorities from revenue enhancement gross sector can non be separated from the increasing conformity to pay revenue enhancements through the uninterrupted attempts of the revenue enhancement reform. In point of service and revenue enhancement audit position, revenue enhancement reform is already demoing positive consequences. Research from University of Indonesia in late 2007 indicated that the bulk of respondents ( 63.6 % ) said they were satisfied with the service after the execution of the revenue enhancement reform. AC Nielsen ( 2005 ) , presented that consumer satisfaction index ( IQ Index ) at the Tax Office ( KPP ) Large Taxpayers are really high, that is equal to 81, greater than the mean degree of satisfaction of public service nationally by 75. In add-on, revenue enhancement reform has made a positive part to the battle against corruptness in Indonesia through a series of intensive supervising and audit. Transparency International Survey ( 2009 ) sing the Corruption Perception Index ( CPI ) , Indonesia scored 2.8 ranks 111 among 180 states. Indonesia CPI addition significantly compared to the figure of the last 3 old ages. From 1.9 in 2003 to 2.0 in 2004 and rose to 2.2 in 2005. Teten Masduki from Indonesian Corruption Watch ( ICW ) said that the chief subscribers to the lifting mark of Indonesia is revenue enhancement reform and the constitution of the Corruption Eradication Commission. The World Group study besides provides information on an addition of Indonesia revenue enhancement rank from 135 become 123. This is a prove that there are the convenience and comfortable of taxpayers to carry through their rights and revenue enhancement duties. The undermentioned testimony on the execution of revenue enhancement refom in Dutch east indies:
Carlos Silvani ( IMF )
“ aˆ¦ Improve revenue enhancement and imposts disposal. The Government urgently needs to raise grosss to finance its budget. But this should be done in a manner that does n’t falsify or discourage investing determinations. The recent constitution of a big taxpayer office in Jakarta — with faster processing, more transparence, and less harassment — is a promising start. Similar reforms should be implemented throughout the revenue enhancement and imposts system every bit shortly as possible. At the same clip, more people should be covered by the revenue enhancement cyberspace, for both gross and equity grounds. ”
Mark Baird, World Bank Country Director for Indonesia
“ Indonesia has a good path record of prudent financial direction. … The proposed constitution of a proposed big taxpayer office, if decently implemented done, could signal welcome moves to guarantee equity in the sharing of the revenue enhancement load. ”
Asiatic Development Bank ( ADB )
“ The Large Tax Office/LTO has been good received by taxpayers, and spread outing the construct to other offices as planned will assist in reconstructing the revenue enhancement disposal ‘s repute. ”
Boediono ( Former Minister of Finance, today. Vice President of Indonesia )
“ Bravo Directorate General of Tax ( DGT ) ”