Despite being the largest economy in Southeast Asia, Indonesia still incurs hindrances in bolstering its prospective economy due to a severe lack of revenue. As tax burden increases, many Indonesian tycoons shift their assets overseas to evade onerous income tax. Consequently, the Indonesian government proposes the implementation of tax amnesty to lure money back into the domestic market. Besides certain criticism, this approach is welcomed because of its expediency. Tax amnesty seems to be a pragmatic policy that employs the economic principles: People face tradeoffs and people respond to incentives. Both the government and the tax-dodgers face tradeoffs in this case. The Indonesian politicians demonstrate that they prioritize efficiency over
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Tax amnesty is projected to earn the Indonesian government from eight billion dollars to fifteen billion dollars in revenue, which will boost tax revenue, put an end to capital flight, and ease the pressure of insufficient government budget. Moreover, the abundant revenue saves Indonesia from getting close to the constitutional cap of three percent budget deficit and consequential spending cuts, which simultaneously leads to the development of a stable domestic market, and society’s maximum efficiency. In contrast, Indonesia will have to compensate its social equality for eliminating the punishment of financial crimes, since the deal is explicitly designated for the rich tax-dodgers, and consequently leaves the dutiful taxpayers with bitterness of unfair treatment. However, the new Indonesian governors, who are under pressure to impose reform plans before the end of their administration, seem to accept this lucrative tradeoff for only nine hundred thousand of the nation’s two hundred fifty-five million population truthfully pay annual income tax in 2014, indicating that the monetary gain from implementing tax amnesty will clearly outweigh the number of …show more content…
The Indonesian tycoons have shifted approximately nine hundred billion dollars into their secret offshore accounts in Singapore, Hong Kong, Switzerland, and Mauritius, whose names will soon be revealed once the jurisdictions of these countries enact the Common Reporting Standard (CRS), the agreement to share foreign account-holders’ information with their home governments, take effect next year. The tax evaders have a limited chance to recompense the government from one percent to six percent of their possessions. In return, these scofflaws will be exempted from subsequent prosecutions of their past financial crimes. The proposed tax amnesty seems to offer an advantageous tradeoff for the delinquents, who simply have to sacrifice an inconsiderable portion of their wealth to avoid being charged with tax
Tax amnesty is projected to earn the Indonesian government from eight billion dollars to fifteen billion dollars in revenue, which will boost tax revenue, put an end to capital flight, and ease the pressure of insufficient government budget. Moreover, the abundant revenue saves Indonesia from getting close to the constitutional cap of three percent budget deficit and consequential spending cuts, which simultaneously leads to the development of a stable domestic market, and society’s maximum efficiency. In contrast, Indonesia will have to compensate its social equality for eliminating the punishment of financial crimes, since the deal is explicitly designated for the rich tax-dodgers, and consequently leaves the dutiful taxpayers with bitterness of unfair treatment. However, the new Indonesian governors, who are under pressure to impose reform plans before the end of their administration, seem to accept this lucrative tradeoff for only nine hundred thousand of the nation’s two hundred fifty-five million population truthfully pay annual income tax in 2014, indicating that the monetary gain from implementing tax amnesty will clearly outweigh the number of …show more content…
The Indonesian tycoons have shifted approximately nine hundred billion dollars into their secret offshore accounts in Singapore, Hong Kong, Switzerland, and Mauritius, whose names will soon be revealed once the jurisdictions of these countries enact the Common Reporting Standard (CRS), the agreement to share foreign account-holders’ information with their home governments, take effect next year. The tax evaders have a limited chance to recompense the government from one percent to six percent of their possessions. In return, these scofflaws will be exempted from subsequent prosecutions of their past financial crimes. The proposed tax amnesty seems to offer an advantageous tradeoff for the delinquents, who simply have to sacrifice an inconsiderable portion of their wealth to avoid being charged with tax