1. 10.Government Revenue: Taxation in Theory and Practice

2. 10.1. Role of Tax in The Government and Economy
The Government has the right to collect taxes
Role and Function of Tax
Source of fund finance government activities and development
Instrument to manage national economy  fiscal policy, tariff policy, etc
Instrument to maintain economic fairness

3. 12.2. Types of Taxation Taxes on earnings payroll tax
Taxes on individual income
capital gain tax
Taxes on corporate income
Taxes on wealth
property tax, estate (inheritance tax)
Taxes on consumption
 sale tax, excise tax

4. 12.3. Desirable Characteristics of Any Tax System
Economic efficiency
Administrative simplicity
Flexibility
Political responsibility
Fairness

5. 12.4. Economic Efficiency Tax system
 should not distort, but promote economic
efficiency
Behavioral effect of tax
 all taxes affect behavior (reduce spending)
 tax affects on such as work behavior, savings, and investment
Corrective tax
e.g. pollution tax (raises government revenues,
and improve economic efficiency)

6. 12.5. Administrative Simplicity
Tax system
 ought to be easy, and relatively inexpensive
Factors affecting administrative cost of tax system
required recording system
complexity of the system

7. 12.6. Flexibility Tax system  should allow easy adaptation to changed
circumstances
Changes in economic conditions
change in tax rates
Speed of adjustments
automatic, or slow
Political constraints of adjusting rates

8. 14.7. Political responsibility
Taxes system
 held accountable to the public
 transparent

9. 12.8. Fairness The tax system should be fair
 treating those in similar circumstances similarly (horizontal equity)
 imposing higher tax on those who can better bear the burden of taxation (vertical equity)

10. 12.9. Practice of Taxation in Indonesia

11. Introductory Notes Tax as source of fund for national development
Increasing tax revenue to reduce dependence on overseas loan for funding national development
Tax revenues increases overtime, yet, still not sufficient
Tax evasion is common place

12. Types of Tax Income Tax (PPh) Value added tax (PPn)
Luxurious good tax (PPnBM)
Land and building tax (PBB)
Excise
Import duties
Export tax
Other kind taxes, such as pollution tax, retribution

13. Constraints to Increase Tax Revenues
Low average income per capita
Unemployment and poverty
Bad public awareness for paying tax
Corruption
Economic inequality
Tax administration system  expensive and lack in public accountability

14. 12.8. References (1)
Gruber, Jonathan Public Finance and Public Policy. New York: Worth Publishers. Chapter 18 Stiglitz, Joseph E Economics of the Public Sector. New York, USA: W.W. Northon and Company. Chapter 17. Reksohadiprodjo, Sukanto Ekonomi Publik. Yogyakarta: BPFE. Bab 8-12

15. 12.8. References (2)
Badan Pendidikan dan Pelatihan Keuangan, Departemen Keuangan Rep. Indonesia Dasar-Dasar Keuangan Publik. Jakarta: Badan Pendidikan dan Pelatihan Keuangan, Departemen Keuangan Rep. Indonesia. Bab