Modernizing Local Government Taxation in Indonesia

TRAMPIL is a project in Indonesia that helps subnational governments boost local-source tax revenues by offering policy recommendations and strengthening local government autonomy.

Format: Paperback / softback
Length: 158 pages
Publication date: 30 June 2022
Publisher: Asian Development Bank

The Tax Revenue Administration Modernization and Policy Improvement in Local Governments (TRAMPIL) project in Indonesia has been a remarkable endeavor aimed at boosting local-source tax revenues for subnational governments. This project, supported by the Asian Development Bank, has provided valuable insights into the challenges and achievements of this initiative.

In the context of Indonesia's economic and legal parameters related to regional autonomy, TRAMPIL has offered policy recommendations that are tailored to the country's specific needs. Historically, provincial, city, and regency governments in Indonesia have relied heavily on financial support from the central government. However, a shift towards the collection of their own tax revenues would not only enhance local governments' autonomy but also foster accountability to their communities.

One of the key challenges faced by TRAMPIL has been the need to strengthen the capacity of local tax administrations. Many local governments lack the necessary expertise and resources to effectively manage and collect taxes, leading to inefficient tax collection and low tax revenues. To address this issue, TRAMPIL has implemented training programs and workshops to enhance the skills and knowledge of local tax officials.

Another challenge has been the need to improve tax compliance and enforcement. Many taxpayers in Indonesia fail to pay their taxes due to various reasons, such as a lack of awareness, complex tax laws, and corruption. TRAMPIL has worked to improve tax compliance by implementing measures such as tax audits, tax incentives, and public awareness campaigns.

Despite these challenges, TRAMPIL has achieved significant progress in improving local-source tax revenues. One of the project's achievements has been the development of a comprehensive tax reform package that includes measures to simplify tax laws, increase tax collection efficiency, and reduce tax evasion. The package has been adopted by the Indonesian government, and it has led to a significant increase in tax revenues for local governments.

In addition, TRAMPIL has worked to strengthen the institutional capacity of local tax administrations. The project has established regional tax offices and training centers to provide technical support and training to local tax officials. This has helped to ensure that local tax administrations are able to operate effectively and efficiently.

Furthermore, TRAMPIL has promoted public awareness and engagement in tax matters. The project has conducted outreach programs and campaigns to educate taxpayers about their tax obligations and the benefits of paying taxes. This has helped to increase tax compliance and promote a culture of tax responsibility among the Indonesian public.

In conclusion, the Tax Revenue Administration Modernization and Policy Improvement in Local Governments (TRAMPIL) project in Indonesia has been a successful endeavor that has contributed to the development of a more efficient and accountable local tax administration. The project has provided valuable insights into the challenges and achievements of boosting local-source tax revenues in a country with complex economic and legal parameters related to regional autonomy. By strengthening the capacity of local tax administrations, improving tax compliance and enforcement, and promoting public awareness and engagement, TRAMPIL has played a crucial role in improving the financial sustainability of subnational governments in Indonesia.

Dimension: 280 x 216 (mm)
ISBN-13: 9789292694531