A Regional Tax Research Conference will be held on October 27-28, 2011 in Jakarta, Indonesia. This conference is being organized by Action for Economic Reforms (AER) in cooperation with Jubilee South – Asia-Pacific Movement for Debt and Development (JS-APMDD), Perkumpulan Prakarsa and members of the Tax Justice Southeast Asia Network with the support of SOMO and Christian Aid.

Tax Justice is an ongoing global initiative to strengthen and advance national, regional and global
campaigning on tax justice issues. The objectives of the initiative are: 1) to raise the level of awareness about the secretive world of offshore finance; 2) to promote links between interested parties around the world, particularly involving developing countries; 3) to stimulate and organize research and debate; and, 4) to encourage and support national, regional and international campaign activities.

Specific objective of the conference are:

1. To formalize the regional tax network for Southeast Asia;
2. To present studies and papers on key tax justice issues that have relevance for the region and member
3. countries; and
4. To share initiatives and learn from other tax justice campaign experiences.

On 4 May 2011, a Forum on Tax Justice was held at the ASEAN Civil Society Conference/ASEAN People’s Forum 2011 in Jakarta, Indonesia. The forum was organized by Action for Economic Reforms, Jubilee South/Asia-Pacific Movement on Debt and Development (JSAPMDD), Christian Aid and Perkumpulan Prakarsa.

The forum aimed to provide the basic principles of tax justice and an overview on taxation as a policy area.  Specifically, the forum served as a venue to provide updates on specific tax issues such as mineral taxation, tobacco taxes, and regressive taxes; and to link up with other groups interested to engage tax justice issues. We wanted to reach out to a broader audience of civil society advocates in Southeast Asia. The forum was also a building block towards the formal launching of the Southeast Asian Tax Justice Network, which is scheduled in the second half of 2011. Further, one of the tasks of the network is to engage the ASEAN process.  Thus, involvement in the ASEAN Civil Society Conference and the ASEAN People’s Forum was very relevant.

Mr. Setyo Budiantoro of Perkumpalan Prakarsa gave the Welcome Remarks. The first topic, Why a Tax Justice Advocacy and Partnership for Southeast Asia?, was discussed by Filomeno S. Sta. Ana III, Coordinator of AER. He was followed by Ms. Lidy Nacpil of JSAPMDD with the topic of Tax Justice as a Component of Fiscal Justice and Progressive Taxation. The next topic, Tax Transparency in the Extractive Industries Sector, was discussed by Ms. Chandra Kirana, Asia Pacific Coordinator of Revenue Watch Institute. Topic 4 was on Tobacco Taxes as a Just Tool for Public Health which was presented by Dr. Ulysses Dorotheo of the Southeast Asia Tobacco Control Alliance. Lastly, Mr. Wahyu Karya Tumakaka, Director of Business Process Transformation of the Directorate General of Taxes of Indonesia talked about How the Indonesian Government Responds to Tax Challenges at the National and Regional Level. An open forum then followed.

To see photos of the event, go to https://www.facebook.com/media/set/?set=a.10150424386327516.456864.361109817515&type=1

On 21-22 March 2011, the Southeast Asian Strategy Workshop on Tax Justice was held at the Astoria Plaza Hotel in Pasig City. The workshop was organized by Action for Economic Reforms and Jubilee South/Asia-Pacific Movement on Debt and Development (JSAPMDD) in cooperation with Christian Aid (CA). The organizers are part of the global project, “Towards Tax Justice”.

The objectives of the workshop were:

1. To review/refine the discussion paper on regional tax reform advocacy;
2. To identify challenges and expectations of members/potential members on the regional tax reform advocacy;
3. To develop a medium-term plan for Southeast Asian Tax Justice Network, including specific goals and strategies that will be presented in the Asia Conference this year;
4. To prepare for the research conference and the Southeast Asian Tax Justice Network launch, which will be held also this year.

This was called in order to build consensus for the soon-to-be-formed Southeast Asian Tax Justice Network and to consolidate organizations that are already involved. The main idea for the calling of the workshop is to have a more focused research, for capacity building, campaigning around tax justice, addressing regional tax issues and to already begin international campaigning.

The first day was started by Mr. Filomeno Sta. Ana, Coordinator of AER giving the Welcome Remarks. A Background and Introduction about the workshop by Ms. Daphne Villanueva of Christian Aid then followed.

During the workshop, two papers were presented to the members to serve as stimulation for a more in-depth discussion and debate on the formation of the network: the Paper on Regional Tax Reform Advocacy by the Action for Economic Reforms and the Framework for Fiscal Justice and Tax Advocacy by JSAPMDD.

Then came Workshop 1 on Tax Reform Advocacy, followed by Workshop 2 on the Development of the Tax Justice Campaign – Southeast Asia Medium-Term Plan.

The second day was devoted to Planning for the Tax Conference to be held later this year and a Discussion on How to Give Additional Perspective to the Advocacy Toolkit.

The workshop ended by Ms. Lidy Nacpil of JSAPMDD giving the Closing Remarks.

A total 13 individuals participated in the workshop, coming from various countries including Indonesia, Vietnam, Cambodia, and of course, the Philippines.

To see photos of the event, go to https://www.facebook.com/media/set/?set=a.10150424377962516.456861.361109817515&type=1

While some pioneering civil society groups have long been campaigning for fairer tax systems, the critical role of tax in achieving development and social justice has often been neglected by civil society in the North and the South. For many, tax is a complex topic, best left to ‘experts’. But this need not be the case.

Tax may appear technical, but it is an issue too critical to bypass. Fair and effective tax collection is essential for raising the revenue to deliver services that citizens need. It is a powerful tool for redistributing wealth within society to address poverty and inequality. And tax is the glue that builds accountability of governments to their citizens.

The toolkit is not intended to be read from cover to cover in one sitting. It is designed to allow you to dip in and read the sections that are most relevant to your level of experience and knowledge, your interests and your context. We hope there’s some useful material here for everyone and that it inspires you to take forward, or start, your tax justice advocacy. Around the world, organisations and networks are demanding tax justice in growing numbers. Together we can create a sea change in tax policy that genuinely benefits those living in poverty and creates a more equitable distribution of resources, North and South.

Click the links below to access the full text of the toolkit:

Tax Advocacy Toolkit cover

Introducing the Tax Advocacy Toolkit

Chapter 1: Why bother with tax?

Chapter 2: How to develop your tax advocacy strategy

Chapter 3: Doing your tax research

Chapter 4: Getting active on tax

Resources and Glossary

There are two underlying factors for poor tax performance. First, we have many tax administration problems (e.g. tax evasion, poor re- cording and auditing by revenue agencies, and failure to computerize tax collection). Second, there are reforms in our tax structures that are long overdue – some involve raising taxes or plugging sources of leak- ages (e.g. fiscal incentives, especially tax holidays).

The newly elected Aquino administration said that it would not push any tax measure, except rationalization of fiscal incentives. But it may be forced to raise taxes, considering the expected PhP300–325 bil- lion deficit in 2010 and PhP 226 billion in 2011.4 After all, President Aquino’s flagship programs—conditional cash transfers to poor families, universal health coverage, additional year for primary education, etc.—do not come cheap.

The question then is: what to tax? In answer, this paper argues that one way of solving the deficit is by adjusting the excise tax on cigarettes and tobacco products, two of the so-called “sin products.”

There are inconsistencies in the current tax structure and tax data5 prove that these are sources of leakages. As a result, the “sin tax” has not been meeting its revenue potential.

The paper also delves into the tax’s regulatory aspect (i.e. how the tax is supposed to curb cigarette consumption) but only to explain fully the rationale behind the cigarette excise tax. This is still, in the main, a paper to identify the cigarette excise tax leakages and suggest ways of addressing them.

Read full text of “Restructuring the Excise Tax on Cigarettes and Tobacco Products to Address Leakages and Enhance Revenue.” (in .pdf, 20pp.)

The fiscal problem is perhaps P-Noy’s toughest challenge. He promised not to impose new taxes, and this limits his room for maneuver to solve the fiscal constraint, which is essentially a problem of low revenue collection. This is the context in which P-Noy welcomes PPPs (public-private partnerships). Yet, PPPs will not result in higher tax effort.

Improving tax efficiency (like catching tax evaders) and rational- izing fiscal incentives are most welcome. They will increase tax effort (tax collection as a percentage of Gross Domestic Product or GDP), cur- rently at around 13 percent, by a few percentage points. Unfortunately, these actions are not enough to boost the tax effort to a secure level, say, 17 percent of GDP. One measure that should be immediately taken, without breaking P-Noy’s campaign promise of new taxes, is the indexation to inflation of the specific taxes on alcohol and tobacco. Adjusting the tax to inflation is not a new tax.

The NGOs can take up a crucial challenge: Take the lead in hav- ing a fiscal covenant with the P-Noy administration. The NGOs should demand fiscal efficiency, accountability and transparency. They should demand higher spending for education, health and infrastructure, which will benefit the poor. As part of the covenant, they should be open to introducing progressive taxes to finance development. P-Noy will also benefit from this type of NGO intervention. He gains political space and additional political capital to resolve the fiscal constraint.

Read full text of “Tax Reforms and Collective Action”. (in .pdf, 12pp.)

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.

Read full text of “Assessing Indonesia’s Tax Optimization”. (in .pdf, 36pp.)

This study is focused on a subsector of the industry, referred to as “large-scale metallic mining” around which the above-mentioned controversies have revolved. Small-scale mining actually comprises a significant amount of the sector’s output, but it is governed by another law and regulated by another set of government agencies/offices. Thus, inclusion of small-scale mining revenue issues in this paper would be impractical.

Given the complexity of transparency issues—which range from data gathering and availability to bureaucratic processes across a num- ber of government agencies, this paper is not able to tackle the transparency question comprehensively. The objective is to present a preliminary study, one which will identify the more striking gaps in information and to identify areas for further study in the future.
Primary information for this paper was sourced from a series of Focused Group Discussions (FGDs) with community members and civil society leaders in eight localities where mining operations have located. These were conducted by Bantay Kita from November 2010 to January 2011. The FGD results were enhanced by Key Informant Interviews and exchanges (formal and informal) with industry stakeholders who were willing to cooperate with the inquiry.

Secondary data was sourced from government agencies and other studies. Disaggregated data was available for some categories, e.g., value of production for large-scale, small-scale and non-metallic mining. But this was not the case for other data, such as taxes. The lack of disaggregation presented an obstacle to making certain evaluations, for example, on the contribution by large-scale mining operations to government revenues.

Read full text of “Transparency Issues in the Philippine Mining Industry”. (in .pdf, 28pp.)

This paper, authored by Maita Gomez of Action for Economic Reforms, seeks to address the problems and obstacles faced by LGUs in the generation of revenues from their most stable and most substantial source, real property. The focus of the study is on the poor performance in Real Property Taxes (RPT) collection, on acts and practices that abet, enable and constitute partial or complete evasion of these taxes. After the author’s introduction, the objectives, methodology and scope are described. The section on Real Property Taxation by Local Government Units discusses the implementation of basic RPT and Special Education Fund (SEF), the implementation of other taxes on property, and the revenue performance of property taxes.

The author then calls attention to the successes and failures of RPT implementation as regards record keeping and computerization, estimation of the amount of tax due, collection of delinquent RPT, and amnesties and auctions. A discussion on tax evasion and corruption follows, and the author ends with several conclusions and recommendations based on four identified issues.

Read the full text of “The Failure of the Real Property Tax in Local Governments”. (in .pdf, 36 pp.)

The main idea of this paper on Philippine Fiscal Incentives written by Cristina Morales-Alikpala, is that while fiscal incentives, in their current design, administration, and context, may have proven to be of little value when it comes to encouraging investments, the notion of providing effective subsidies to worthy investors should not altogether be abandoned.

This paper aims to review the economic rationale behind investment incentives, particularly in the Philippine context, and formulate recommendations for future policy decisions that will hopefully enrich the discourse on the desirability of investment incentives. The following section focuses on the economic rationale for investment incentives. Afterwards, the structure of Philippine fiscal incentives is discussed. Two papers assessing Philippine fiscal incentives, Medalla (2006) (2006) and Reside (2006; 2007), are reviewed in detail. In an effort to enrich the ongoing discourse regarding rationalization of fiscal incentives, a review of strategic industrial promotion strategies employing such fiscal incentives is presented. Finally, policy recommendations are set forth and future directions for research are suggested.

Read full text of “Philippine Fiscal Incentives: A Note on Design, Administration, and Context”. (in .pdf, 32pp.)