Tax Education Challenges in Indonesia
By: Yulianti Abbas, Ph.D., Head of the Postgraduate Study Program in Accounting FEB UI and Christine Tjen, S.E., Ak., M.Int.Tax, CA., Coordinator of Tax Education and Research Center FEB UI
KONTAN – (22/10/2021) The government and the DPR have ratified the Bill on Harmonization of Tax Regulations into a law. This rule is considered essential, considering that tax revenue itself has always been the backbone of government financing in Indonesia. Even though it plays a big role, the potential for tax revenue so far can and needs to be increased. In the 2022 State Budget, the government targets tax revenues of IDR 1,262.92 trillion. However, Indonesia’s tax ratio is still relatively low, where in 2020, Indonesia’s tax-to-GDP ratio is only around 8.5%, down from previous periods. The government, especially in this case the Directorate General of Taxes (DGT), has a tough task to increase the tax ratio in the medium term.
How to increase awareness and tax compliance of taxpayers? Tax compliance can certainly be grown with law enforcement. However, “tax awareness” emphasizes more on the intrinsic motivation of taxpayers, where intrinsic motivation is an important factor in supporting tax compliance (Andreoni, et al., 1998). The Tax Education Program, which is based on the idea that educating taxpayers at an early age will increase compliance in the future, is one of the policy alternatives for the government. In theory, Eriksen and Fallan (1996) suggest that tax awareness is influenced by the level of tax knowledge. Tax knowledge increases awareness and ethics, thereby reducing the tendency to do tax non-compliance (Eriksen and Fallan, 1996). Thus, the Tax Education program is expected to improve tax compliance in the future.
In connection with the above, since 2014, the Directorate General of Taxes (DGT) has implemented a tax education program called the Tax Awareness Inclusion Program (Inclusion) which aims to increase tax awareness throughout the community. The target of this program is students, teachers, and lecturers who are educators of future generations. Integrating tax awareness materials into four main aspects of education, namely curriculum, learning, books and student activities, is a means of carrying out tax inclusion. In addition, DGT also organizes an annual event entitled Tax Speaking (Patur), which will be held starting in 2017. DGT conducts Patur activities by making one-day visits to schools and providing materials related to taxation with the aim of introducing the concept of tax to students.
Of course, tax inclusion activities are not easy for DGT. The integration of taxes into curriculum, learning processes, and books requires time-consuming planning and coordination. Implementation of Patur, which is the flagship for inclusion activities, is constrained by the limited human resources at DGT to reach all schools in the territory of the Republic of Indonesia. Implementation time, teaching methods, and student diversity are challenges for DGT in implementing Patur. Especially in the last two years, Patur’s activities must be conducted online, which poses its own challenges in terms of pedagogy. At the higher education level, to date DGT has around 500 partner universities spread across 144 cities. However, 80 percent of the cooperation carried out by DGT is still in the early stages. This means that there is still a lot of homework that must be completed by the DGT in carrying out tax education programs in Indonesia.
Will this inclusion activity bear fruit? It’s hard to answer right now. The effect of an education program on raising awareness and tax compliance can only be measured in the future. The results of interviews with teachers at schools who have participated in the Patur program show the enthusiasm and support of educators to introduce the concept of taxation to students as early as possible. Improper implementation is certainly not an obstacle for the DGT tax education program. In accordance with the concept of education, a learning cycle is needed which of course cannot be separated from errors, feedback, and improvements to achieve an optimal form.
Source: Kontan Newspaper. Issue: Friday, October 22, 2021.
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