The welfare side of taxation: where is it?

by Jennie S. Bev

Benjamin Franklin once said that the only certain things in the world are death and taxes.

Indonesia is definitely suffering from lack of transparency in taxation system, so death could be more favorable. And by “transparency,” I’m referring to the ease of verifying incomes (both earned and unearned) and deductions, allowing tax payers to clearly and directly see where the taxes paid are allocated, particularly those promised for “the welfare of the people.” Without a good system, we can only expect to see more tax avoidance, tax mitigation, and tax evasion by corrupt tax payers and corrupt tax officials like Gayus.

The underlying philosophy of taxation in Indonesia is noble, as posited in UU No. 28/2007 article 1, “kontribusi wajib kepada negara yang terutang oleh orang pribadi atau badan yang bersifat memaksa berdasarkan Undang Undang, dengan tidak mendapat timbal balik secara langsung dan digunakan untuk keperluan negara bagi sebesar-besarnya kemakmuran rakyat” or translated as: “mandatory contribution to the state by individuals or entities as required by Laws, without getting any direct reciprocity and for the purpose of the state’s for the welfare of the people.”