A critical review of various taxation strategies reveals that taxes have been neglected as a weapon to fight poverty and build democratic accountability in poor countries.5 Generally, the countries of the world have pursued three main strategies: vying to lower corporate taxes in order to attract foreign investment; following trade liberalization, by cutting back taxes previously obtained from international trade – which is a betrayal for poor countries that still rely on primary commodities as a main source of income; and tolerance of possibilities for wealthy people and multinational companies to move their wealth and profits abroad where they can escape the burden of paying taxes.
This paper is organized into a number of parts. The first part addresses the development of domestic revenues, through which the in- creasing role of taxation can be seen. Then, the discussion moves on to tax reform in Indonesia, followed by a comparison with tax reform in a number of other countries. Based on this comparison, the next part points out things that could strengthen tax reform strategies in Indonesia. The paper concludes with an overview of tax reform and the purposes it serves. It should be acknowledged that the scope of the current writing is limited, considering the broad dimensions of issues of taxation, especially regarding its technical aspects, although an attempt has been made in this paper to accommodate this breadth.
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