Analyze the Accuracy of Agency Income Tax Rate Reduction of Jokowi

Tax amnesty has elicited series of policy following the decision of government to find option mending the deficit of national budget. The long prospect of government to repatriate  the funds of indonesian businessmen who store their money overseas nonetheless has alarmed the destinated countries like singapore, switzerland. Indonesia has involved in verbal brawl with singapore due to the blame to singapore who allegedly to defer tax amnesty program. 

Singapore made the policy to offer ransom to the government provided the fund will not be repatriated. Indonesia saw this as eminent effort to fail the repatriation of indonesian money stored in that country, though singapore itself plead having no intention for such endeavor. 

Jokowi seems  to anticipate any act to fail the tax amnesty government. It is just critical for the government both long and short term since it's much expected the fund regained will amend the deficit of budget in the midst of on going massive infrastructure. Beside, jokowi desires all the indonesian businesmen to repatriate their money to boost the growth of economy. It has been so long that indonesian money has enriched another countries since the businessmen opt to conceal them abroad. 

To ensure the success of tax amnesty program government has ruled the issue to reduce the agency income tax rate. It's roughly reduced from 25% to 17% to equate another country like singapore. According to jokowi, the reduction is indispensable to withdraw investors and to vie with another countries. In his tax amnesty socialization, jokowi said that:" we have to reduce the rate for the neighbor countries has made such". 

However, the issue to reduce the agency income tax rate harvests the critics. It's purely in contrast since the country which lean much its revenue almost 80% from tax revenue yet the idea of president in certain term needs to reconsider prudently with the impact toward the national revenue. Admittedly, the low tax rate becomes the magnet for investors yet the diminishing of tax rate might bear another problem of deficit. Since the government has not found alternatives for revenue, the idea of tax rate reduction blatantly to impulsive and spontaneous. 

Many criticize on the issue of tax rate of agency income plan. Executive Director of Danny Darusalam Tax Center, darusalam said that indonesia has to reduce the tax rate. It is the global trend of rich countries to trawl the investors. On the other hand, it will affect the tax revenue and national revenue budget. According to darusalam, the reduction of tax rate for agency income must be gradually done. The most feasible rate of reduction is 20% and not 17% of which government proposed.It's because the country still lean too much on tax revenue, the sudden reduction will absolutely affect balance of national revenue and budget. 

In fact, in an ocassion of tax socializatoin, jokowi has the same opinion that if it's not possible to directly go to 17%, it should be in gradual phase.