IDEAS home Printed from https://ideas.repec.org/a/lpe/efijnl/201706.html
   My bibliography  Save this article

Revenue and Distributional Impact Analysis of Indonesian Personal Income Tax Reform in 2008

Author

Listed:
  • Bimo Wijayanto

    (Kedeputian Bidang Kajian Pengelolaan Isu-isu Sosial, Budaya, dan Ekologi Strategis – Kantor Staf Presiden)

  • Yogi Vidyattama

    (The National Centre for Social and Economic Modelling (NATSEM) & Institute for Governance and Policy Analysis (IGPA) University of Canberra)

Abstract

Since 1983, Indonesian tax policy has been the subject of ongoing reforms in order to replace the old colonial tax arrangements, reduce income dependency from oil and gas, decrease the government’s foreign debt and maintain its fiscal sustainability. Nevertheless, after 25 years of reform, actual Indonesian tax performance is still far from what might have been expected as Indonesia have one of the lowest total tax ratios among the ASEAN countries. This research show that the most recent changes put in place may have reduced potential tax revenue from personal income but an increase in the compliance rate.

Suggested Citation

  • Bimo Wijayanto & Yogi Vidyattama, 2017. "Revenue and Distributional Impact Analysis of Indonesian Personal Income Tax Reform in 2008," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 63, pages 97-113, December.
    • Handle: RePEc:lpe:efijnl:201706
    as

    Download full text from publisher

    File URL: http://www.lpem.org/repec/lpe/efijnl/201706.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ikhsan, Mohamad & Trialdi, Ledi & Syahrial, Syarif, 2005. "Indonesia's new tax reform: Potential and direction," Journal of Asian Economics, Elsevier, vol. 16(6), pages 1029-1046, December.
    2. World Bank, 2006. "Making the New Indonesia Work for the Poor," World Bank Publications - Reports 8172, The World Bank Group.
    3. Gitte Heij, 2001. "The 1981-83 Indonesian Income Tax Reform Process: Who Pulled The Strings?," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 37(2), pages 233-251.
    4. Mitton,Lavinia & Sutherland,Holly & Weeks,Melvyn (ed.), 2000. "Microsimulation Modelling for Policy Analysis," Cambridge Books, Cambridge University Press, number 9780521790062, September.
    5. Gordon, Roger & Li, Wei, 2009. "Tax structures in developing countries: Many puzzles and a possible explanation," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 855-866, August.
    6. repec:bla:revinw:v:27:y:1981:i:3:p:211-42 is not listed on IDEAS
    7. Gillis, Malcolm, 1985. "Micro and macroeconomics of tax reform : Indonesia," Journal of Development Economics, Elsevier, vol. 19(3), pages 221-254, December.
    8. Mr. John D Brondolo & Frank Bosch & Mr. Eric Le Borgne & Mr. Carlos Silvani, 2008. "Tax Administration Reform and Fiscal Adjustment: The Case of Indonesia (2001-07)," IMF Working Papers 2008/129, International Monetary Fund.
    9. Hal Hill, 2000. "Indonesia: The Strange and Sudden Death of a Tiger Economy," Oxford Development Studies, Taylor & Francis Journals, vol. 28(2), pages 117-139.
    10. Wallace, Sally & Wasylenko, Michael J. & Weiner, David, 1991. "The Distributional Implications of the 1986 Tax Reform," National Tax Journal, National Tax Association, vol. 44(2), pages 181-98, June.
    11. Leigh, Andrew & van der Eng, Pierre, 2009. "Inequality in Indonesia: What can we learn from top incomes?," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 209-212, February.
    12. Daniel B. Radner, 1981. "An Example Of The Use Of Statistical Matching In The Estimation And Analysis Of The Size Distribution Of Income," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 27(3), pages 211-242, September.
    13. Hill,Hal, 2000. "The Indonesian Economy," Cambridge Books, Cambridge University Press, number 9780521663670, September.
    14. Wallace, Sally & Wasylenko, Michael J. & Weiner, David, 1991. "The Distributional Implications of the 1986 Tax Reform," National Tax Journal, National Tax Association;National Tax Journal, vol. 44(2), pages 181-198, June.
    15. Riyana Miranti, 2010. "Poverty in Indonesia 1984-2002: the impact of growth and changes in inequality," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 46(1), pages 79-97.
    16. Luca Gandullia & Nicola Iacobone & Alastair Thomas, 2012. "Modelling the Tax Burden on Labour Income in Brazil, China, India, Indonesia and South Africa," OECD Taxation Working Papers 14, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hal Hill, 2018. "Asia's Third Giant: A Survey of the Indonesian Economy," The Economic Record, The Economic Society of Australia, vol. 94(307), pages 469-499, December.
    2. Amir, Hidayat & Asafu-Adjaye, John & Ducpham, Tien, 2013. "The impact of the Indonesian income tax reform: A CGE analysis," Economic Modelling, Elsevier, vol. 31(C), pages 492-501.
    3. Sarah Xue Dong, 2021. "The effect of labour demand on women’s intra-household decision power: Evidence from Indonesia," Departmental Working Papers 2021-01, The Australian National University, Arndt-Corden Department of Economics.
    4. Wishnu Mahraddika, 2021. "How effective is capital flow management? The Indonesian experience," Departmental Working Papers 2021-15, The Australian National University, Arndt-Corden Department of Economics.
    5. Mitsuhiko Kataoka, 2015. "Interprovincial differences in the endowment and utilization in labour force by educational attainment in Indonesia's post-crisis economy," ERSA conference papers ersa15p878, European Regional Science Association.
    6. Briones, Roehlano & Felipe, Jesus, 2013. "Agriculture and Structural Transformation in Developing Asia: Review and Outlook," ADB Economics Working Paper Series 363, Asian Development Bank.
    7. Sean Higgins & Nora Lustig & Whitney Ruble & Timothy M. Smeeding, 2016. "Comparing the Incidence of Taxes and Social Spending in Brazil and the United States," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(S1), pages 22-46, August.
    8. Howard Dick, 2008. "The 2008 Shipping Law: Deregulation Or Re-Regulation?," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 44(3), pages 383-406.
    9. Wenéyam Hippolyte Balima & Jean‐Louis Combes & Alexandru Minea, 2016. "Bond Markets Initiation and Tax Revenue Mobilization in Developing Countries," Southern Economic Journal, John Wiley & Sons, vol. 83(2), pages 550-572, October.
    10. Leszek Balcerowicz & Andrzej Rzonca, 2015. "Puzzles of Economic Growth," World Bank Publications - Books, The World Bank Group, number 20601.
    11. Rahmatina A. Kasri, 2011. "Time series evidence on education and economic growth in Indonesia," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 3(2), pages 109-123, April.
    12. Iman Harymawan & Brian Lam & Mohammad Nasih & Rumayya Rumayya, 2019. "Political Connections and Stock Price Crash Risk: Empirical Evidence from the Fall of Suharto," IJFS, MDPI, vol. 7(3), pages 1-16, September.
    13. Muhammad Cholifihani, 2008. "A Cointegration Analysis Of Public Debt Service And Gdp In Indonesia," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 4(2), pages 4-1.
    14. M. Chatib Basri & Hal Hill, 2004. "Ideas, Interests and Oil Prices: The Political Economy of Trade Reform During Soeharto's Indonesia," The World Economy, Wiley Blackwell, vol. 27(5), pages 633-655, May.
    15. Artidiatun Adji & James Alm, 2016. "Testing for Ricardian Equivalence in Indonesia," Working Papers 1616, Tulane University, Department of Economics.
    16. repec:wly:soecon:v:83:2:y:2016:p:550-572 is not listed on IDEAS
    17. Mansur, Alfan, 2015. "Identifying Shocks on the Economic Fluctuations in Indonesia and US: The Role of Oil Price Shocks in a Structural Vector Autoregression Model," MPRA Paper 94018, University Library of Munich, Germany, revised 09 Jun 2015.
    18. Alexander D. Rothenberg & Samuel Bazzi & Shanthi Nataraj & Amalavoyal V. Chari, 2017. "When Regional Policies Fail An Evaluation of Indonesia's Integrated Economic Development Zones," Working Papers WR-1183, RAND Corporation.
    19. Amir, Hidayat & Nugroho, Anda, 2013. "Development of Web-Based CGE Model for Tax Policy Analysis," MPRA Paper 66300, University Library of Munich, Germany.
    20. Vertesy, Daniel & Szirmai, Adam, 2010. "Interrupted innovation: Innovation system dynamics in latecomer aerospace industries," MERIT Working Papers 2010-059, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    21. Kim, Kyunghoon & Sumner, Andy, 2021. "Bringing state-owned entities back into the industrial policy debate: The case of Indonesia," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 496-509.

    More about this item

    Keywords

    personal income tax; microsimulation; Indonesia;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:lpe:efijnl:201706. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Muhammad Halley Yudhistira (email available below). General contact details of provider: https://edirc.repec.org/data/feuinid.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.