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Jakarta Post

The benefits of tax amnesty (PART 1 OF 2 )

  • Gatot Soepriyanto

Jakarta   /   Mon, July 11 2016   /  09:53 am

The tax amnesty bill was finally approved by the House of Representatives on June 28. However, understandably not everyone agrees on the amnesty.

Critics argue that the tax pardon would be unfair to honest taxpayers and hence could encourage future noncompliance on account of the anticipation of another amnesty. They suggest that instead of giving an amnesty, cracking down on tax dodgers would be better, especially when the government can take advantage of the Automatic Exchange of Information (AEoI) program, to be implemented in 2018 by members of the Organization for Economic Cooperation and Development (OECD).

While I share the same argument, the flip side of the coin is that there is ample evidence that amnesty can work wonders, especially when it is executed carefully as a part of a large enforcement effort. Among other benefits, it generates a much needed short-term...