2015年-世界发展银行全球_Taxes_and_Public_Spending_in_Indonesia___Who_Pays_and_Who_Benefits__36页_679kb

Summary of "Taxes and Public Spending in Indonesia: Who pays and who benefits"

Core Content

This document provides an analysis of the increasing inequality in Indonesia and explores the role of fiscal policy in addressing it. It outlines the current state of inequality, the impact of public spending and taxation on inequality, and highlights the need for policy reforms to ensure more equitable growth and development.

Main Views

• Rising Inequality: Indonesia has experienced a rapid increase in inequality, as measured by the Gini coefficient, which rose from 30 points in 2000 to 41 points in 2014. This is one of the highest increases in the region.
• Economic Growth and Inequality: While Indonesia's real GDP per capita has grown at an average of 5.4% between 2000 and 2014, the benefits of this growth have been unevenly distributed, with the richest 10% consuming as much as the poorest 54%.
• Fiscal Policy as a Tool: Fiscal policy, including government spending and taxation, is a key instrument to address inequality. Indonesia's fiscal policy has had limited success in reducing inequality compared to other countries like South Africa and Brazil.
• Spending on Social Programs: Indonesia spends on programs such as education, health, and social assistance, but these programs are not sufficient in scale or effectiveness to significantly reduce inequality.
• Taxation and Inequality: Indirect taxes such as VAT and excise on tobacco are relatively neutral in their impact on inequality, while personal income tax has a low base and limited progressivity, making it less effective in reducing inequality.
• Public Perception: Indonesians perceive inequality as too high and prefer a more equal distribution of income and consumption. However, current fiscal policies do not fully align with these preferences.
• Need for Further Research: The document uses 2012 data and does not account for recent fiscal developments, such as changes in fuel subsidies and expansion of scholarship and cash transfer programs. It calls for further research and analysis to incorporate these changes.

Key Information

• Inequality Metrics: The Gini coefficient is used to measure inequality, with higher values indicating greater inequality.
• Poverty Reduction: The poverty rate has halved from 24% to 11% since the 1997-98 Asian financial crisis.
• Economic Classes:
  • Poor: Below the poverty line, with limited resources and high vulnerability to shocks.
  • Vulnerable: Above the poverty line but at risk of falling back into poverty.
  • Emerging Consumer Class: Not yet economically secure but with some income and savings.
  • Consumer Class: Economically secure with high income and savings.
  • Upper Class: High income, wealth, and access to resources and opportunities.
• Fiscal Policy Impact:
  • Education spending is inequality-reducing but not as much as in other countries.
  • Health spending benefits the poor more than the rich, but the low level of spending limits its impact.
  • Social assistance programs are the most pro-poor but have limited scale.
  • Personal income tax is underutilized in Indonesia and has a limited impact on inequality.
• Policy Recommendations:
  • Expand and improve the effectiveness of social assistance programs.
  • Increase personal income tax compliance and broaden the tax base.
  • Enhance the role of fiscal policy in reducing inequality, particularly through progressive taxation and targeted spending.
  • Continue to monitor and analyze fiscal policies to reflect recent developments and ensure they address inequality effectively.

Structure of the Document

• Executive Summary: Highlights the main findings and the urgency of addressing inequality.
• Fiscal Policy and Inequality: Discusses the role of fiscal policy in reducing inequality and its limited impact in Indonesia.
• Public Spending and Inequality: Analyzes how different types of spending affect inequality.
• Revenue Raising and Inequality: Explores the impact of taxation on inequality.
• Case Studies:
  • Putri: A poor individual with limited assets and high vulnerability.
  • Fitri: An emerging consumer with some education and savings.
  • Dewi: A member of the middle class with improving assets and savings.
  • Siti: A member of the upper class with significant assets and high returns.
• Conclusion: Emphasizes the need for fiscal reforms to address inequality and improve equity.
• References: Lists sources and data used in the report.

Acronyms and Terms

Conclusion

Indonesia faces significant challenges in reducing inequality, which is rising faster than in many of its East Asian neighbors. Fiscal policy has a crucial role to play in this process, but it has not been effective enough in reducing inequality. The document calls for more progressive taxation and better-targeted public spending to ensure that the benefits of growth are more evenly distributed. It also emphasizes the need for further research to incorporate recent fiscal developments and improve the analysis of how fiscal policies affect inequality.