Jakarta - The PRAKARSA has completed a research entitled “Implementation of Wealth Tax in Indonesia: Potential and Opportunities” to study and obtain a comprehensive picture of the potential and opportunities for implementing wealth tax in Indonesia and its intersection with zakat. the PRAKARSA believes that wealth tax can be an alternative fiscal policy that has the opportunity to be implemented in Indonesia to increase the potential for state revenue.
Indonesia as a developing country is considered to be experiencing poor fiscal performance, especially the economic downturn due to the Covid-19 pandemic. This is because in the last decade the ratio of tax revenue to Gross Domestic Product (GDP) or tax ratio Indonesia is still far from its potential. Even in the last 5 years tax ratio It is difficult for Indonesia to reach 13 percent, even though many international institutions such as the International Monetary Fund (IMF) and the world financial consultancy Deloitte predict the potential for tax ratio indonesia as middle income country should be 17 percent. "This means that our ability to collect taxes and make breakthroughs in the mobilization of domestic resources that we have the potential for has not been utilized optimally," said Ah Maftuchan, Executive Director of The PRAKARSA.
In addition, Ah Maftuchan also explained that Indonesia's fiscal capacity is very limited to be able to recover from the COVID-19 pandemic crisis and other potential crises such as food and energy. “From there we see that we can no longer business as usual on fiscal policy, we must make breakthroughs so that domestic resource mobilization what we need multi trackk, or need to reflect the effort that comprehensive of the existing potential," he said.
According to him, one of the potentials possessed to realize this is the super-rich group in Indonesia. However, Indonesia's condition is not considered unique because in various countries there is also a high increase in inequality. Even after the Covid-19 pandemic, the super-rich group experienced a very significant increase in wealth while the poor group was in a very worrying condition.
“We are of the view that a wealth tax needs to be introduced as an alternative to fiscal policy for two things, first, it can be an alternative to increase state revenues. Second, it can be a tool for the state to accelerate the distribution of wealth and resources while also increasing the country's ability to finance development," said Ah Maftuchan.
Furthermore, he also said that the wealth tax is one of the reflections of efforts for tax justice. "A concrete reflection that tax policy is closer to a sense of justice is when taxes are applied more progressively in this case, it means applying a wealth tax for the super rich," he said.
Meanwhile, Researcher The PRAKARSA Irvan Tengku Harja added, currently the government is still trying to explore new tax revenue sources. “The government can add wealth tax as a new type of tax in addition to the existing types of taxes. While it can stimulate state revenues, wealth taxes can also slow down the rate of wealth inequality," he said.
This is based on data on Indonesia's poverty rate as of March 2022 reaching 26,16 million, according to Irvan, this poverty rate is in fact difficult to eradicate, let alone added by the pandemic crisis. While most Indonesians and even the world are experiencing economic difficulties, Forbes' 100 richest people in Indonesia have actually experienced a significant increase in wealth. "The face of inequality in Indonesia is that the richest 1 percent of people control 30 percent of the national wealth, while the 50 poorest people only control 5 percent of the national wealth, and the remaining 49 percent is just distributed," he said.
For that, said Irvan, wealth tax should be considered as an alternative policy to overcome economic problems. He explained that a wealth tax would be levied on net worth, transfer of wealth, and wealth from appreciation resulting from capital gains owned by highnet wroth individually (HNWI) or super rich people with a net worth of more than 1 million USD.
Furthermore, Irvan also conveyed, this research found at least 5 models for calculating wealth tax that could be applied. But of the 5 models, The PRAKARSA has chosen one of the possible models to be implemented in Indonesia.
The PRAKARSA offered a proposal for a wealth tax format in the form of imposing a wealth tax on HNWIs or super-rich people who have wealth over 144 billion rupiah per the last tax year. While tax objects include assets in the form of savings or demand deposits, deposits, stocks, warrants, government securities, sukuk and precious metals. While those originating from the transfer of wealth in the form of inheritance, donations and grants.
Tax collection time is annual with reporting mechanism self-assessment such as reporting annual notification letters (SPT) and needs to be verified by the Directorate General of Taxes (DGT). "According to our estimates based on available data, if this wealth tax is applied, there will be a total of 4714 taxpayers. Besides, in order to make the implementation easier, it is also necessary to apply relaxation in the form of installments of 1 year of payment so that it does not burden taxpayers, "said Irvan.
From this proposal, the estimated wealth tax if applied can increase state revenue by 78.50 trillion rupiah. "If we compare this with other types of tax revenues, the wealth tax could be higher than the PPh OP realized in December 2021, even more than twice tax amnesty namely in 2016 and 2022 which generated 61 trillion rupiah. This means that wealth tax needs to be considered as a tax policy,” said Tengku.
It doesn't stop there, this research has also included opinions from members of Commission XI of the DPR RI. The results are quite positive, as many as 47 percent of parliamentarians agree with the application of the wealth tax, but in contrast to the previous time the collection was approved only once in five years.
In addition, the results of this research also explain, basically wealth tax and zakat do not negate each other. Even wealth tax has a strong link with zakat, so that both can be institutionalized as a unified system of wealth redistribution.
According to data from the National Amil Zakat Agency (BAZNAS), if it is calculated the potential for zakat receipts in Indonesia has a large enough value, but its realization is still not optimal. In 2020 the potential for zakat receipts reaches 326,7 trillion rupiah, but the realization only reaches 71,4 trillion rupiah or around 21,7 percent.
Researcher The PRAKARSA Samira Hanim added that the not yet optimal collection of zakat was caused by the habit of the Muslim community in Indonesia who distributed their zakat directly or indirectly through official amil zakat institutions. "Moslem communities in Indonesia distribute their zakat directly to those in need around their place of residence, in their area of origin, or to institutions they already trust outside of the official amil zakat institutions, so it is only natural that the realization of zakat receipts is low," he explained.
In addition, the challenge of collecting zakat is also due to the lack of public trust in charity institutions managed by the government and the level of public awareness to collect zakat at official institutions such as BAZNAS is still limited to obligations as employees in a company. "The payment of zakat has not been in the form of personal awareness, plus in practice the payment of zakat that has been in effect so far is a minimum standard practice and not with a standard of virtue," said Samira.
