Author: Ria Mawaddah S.Ak
The Covid 19 pandemic has not only impacted health, but also the economy. It is seen from Indonesia’s economic growth experienced a major contraction during the pandemic. Indonesia experienced supply shock and demand shock at the same time, affecting unstable economy. The Central Agency of Statistic (BPS) noted that economic growth contracted to -2,07% in 2020 that caused unstable economic movements and ended in deflation. In 2021, the easing of social restrictions in many countries helped increase global economic activity. Thus, Indonesia’s domestic economic performance become positive by 3,69% and increased to 5,31% in 2022.
This achievement is because the government can prevent inflation by increasing government spending, especially in social and health expenses. Where does the government obtain money while the economy deteriorates? Surely, it comes from the State Budget (APBN) which more than half comes from tax revenue. In 2023, entering the post-pandemic period, tax revenue until April has reached 688,1 trillion. This tax revenue is still growing moderately but the achievement of revenue increased by 21,3% on an annual basis.
If examined, the government must apply 3 main methods in maintaining the post-pandemic economic stability and tax revenues achieve the target. The three methods are Compliance, Supervision and Tax Relaxation.
TAX COMPLIANCE
Benjamin Franklin said “In this word nothing can be said to be certain, except death and taxes”. Why taxes must be certain? If taxes do not exist, the government has deficit, buying is difficult, and ends in famine conditions. Hence, tax compliance is the main thing in growing economy. However, in 2020, Directorate General of Taxes (DJP) recorded that tax compliance through the submission of the Annual Tax Return (SPT) only reached 78%, although it raises 84.07% in 2021 but fell back to 83.2% in 2022.
The government must build a credible, accountable and transparent system and establish tax reform instruments and new tax sources in increasing the taxpayer compliance and participation. One of the tax instruments in reforming post-pandemic taxes is consumption-based tax, because the potential revenue is better than other sectors and is not distortive compared to other types of taxes. Moreover, the compliance of startup taxpayers both e-commerce and fintech, also must be concerned for the post-pandemic period. This business is able to develop in any condition and has massive impact of digitalization. The Government along with the Ministry of Communication and Information (Kominfo) must cooperate in recording this fintech business, since transaction data of e-commerce entrepreneur is difficult to detect which causes the realization and compliance of taxes from this sector being lack.
SUPERVISION
Indonesia has 3 tax systems; official-assessment, self-assessment and with-holding system that have weaknesses and threats in tax repayment and withholding. In the official-assessment system, the tax authorities as the tax collector or fiscus have authority to determine the amount of tax owed so that taxpayers are passive. For example, motor vehicle tax and building land tax. Although it looks profitable, this system will take a plenty budget since the manpower or tax employees will be huge.
Self-Assessment system is also applied as an answer to these concerns. But it is also risky because taxpayers are active for calculating, paying and self-reporting taxes owed. They are sometimes used for tax avoidance actions. Moreover, with-holding tax system is used to fulfill tax obligations by third parties, such as income tax article 21 for employees. However, some parties use this system in tax planning strategies as an effort to streamline the tax burden that must be paid.
Reflecting on that fact, the Ministry of Finance (Kemenkeu) through DJP must immediately prepare for the Core Tax Administration System (CTAS). It is designed to make the tax system digitized and integrated so that tax services are more effective in reporting taxes so as to increase tax revenue and tax ratio. CTAS has potential to improve all important pillars of taxation including IT, SOPs and regulations. CTAS facilitate the improvement of data quality, segmentation and profiling of taxpayers to manage their debts and tax bills. Through CTAS, supervision of taxpayers can be strengthened and law enforcement can be done based on data and risk.
In monitoring the system, to improve tax compliance and secure the revenue target in the 2023 post-pandemic period which reached IDR 1,718 trillion, the government through the DJP and the Ministry of Finance must ensure supervision of taxpayers that qualify the subjective and objective tax requirements but do not yet have Taxpayer Identification Number (NPWP). The first step is to compile a list of supervision priorities such as supervision of individuals with high income or high network individuals, group company taxpayers and the digital economy with the integration of the Indonesian Identity Card (KTP) with NPWP. So that the principle of tax justice can be created and the number of taxpayers and tax revenues might increase.
RELAXATION
Making tax obligations more relaxed by providing an extension of time in conducting tax administration and reduction of income tax rates is an effective way to increase the amount of tax revenue, especially during the post-pandemic period. Tax relaxation will attract investors to encourage economic activity. Several studies have proven that relaxation has a positive effect on tax compliance.
Tax relaxation during the post-pandemic period can be focused on reducing regional and national tax rates, especially tourism areas that have just stretched after the Covid pandemic. So that people and businesses become “relaxed” with tax obligations arising after the pandemic. If the taxes imposed at the beginning of the post-pandemic are high, businesses cannot expand, inflation and economic instability will be hampered. With tax relaxation, businesses can conduct promotions in the form of discounts on merchandise to increase sales and purchasing power to boost demand that can drive the economy.
Tax revenue increases through tax compliance. By being monitored, tax revenue will be stable and channeled to the right expenditure items. With relaxation, people expand their business so that economic growth runs and economic stability is created.
