IDEAS home Printed from https://ideas.repec.org/a/lpe/efijnl/200612.html
   My bibliography  Save this article

An Analysis of Personal Income Tax Compliance Rate in Indonesia For The Period 1996-2004

Author

Listed:
  • Friska Parulian Panjaitan

Abstract

The Asian Financial crisis in 1998 has caused a significant budget burden for the Indonesian government. As a result, efforts to increase the revenue and the efficiency of expenditure have become an important issue for the government to guarantee fiscal sustainability. This research aims to analyze the existing income tax potential, review the current tax system in Indonesia, observes the source of problem, in order to recommend some alternative suggestion in order to increase the income tax revenue level in the future. The scope of income tax potential in this research covers only in the area of Personal Income Tax (PIT). Pareto distribution is used for estimating the potential income tax based on several scenarios. Next, the estimation results are compared to the actual tax revenue in order to know the size of Indonesian tax compliance rate for the year 1996, 2000 and 2002. Finally, as the conclusion, it can be strongly stated that the compliance rate of PIT in Indonesia is low, it only varies between 8%-18% in year 2002. Therefore, several efforts in the area of tax administration in order to catch the potential tax payers, and the sharpening of the definition of non-taxable income (including the agriculture income) are considered an important act in the future to improve the tax revenue performance.

Suggested Citation

  • Friska Parulian Panjaitan, 2006. "An Analysis of Personal Income Tax Compliance Rate in Indonesia For The Period 1996-2004," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 54, pages 344-376, December.
  • Handle: RePEc:lpe:efijnl:200612
    as

    Download full text from publisher

    File URL: http://www.lpem.org/repec/lpe/efijnl/200612.pdf
    Download Restriction: no

    More about this item

    Keywords

    Tax; tax compliance; tax evasion;

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

    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:200612. See general information about how to correct material in RePEc.

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

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.