Arbitrary Tax Increases
The government’s plan to increase value-added tax and widen its coverage triggers controversy. The key is to build public trust.
IF a nation is facing difficulties collecting tax from its citizens, who is to blame? In Indonesia, where the tax ratio continues to fall—last year it was only around 8 percent—and is among the lowest in the world, it is usually taxpayers who are blamed. It must be admitted that compliance with tax obligations is still low. But attacking the problem downstream without looking at the issues upstream is clearly a serious mistake.