Tax revenue optimization strategy in “shadow economics”: Prospective approach

Abstract

Indonesia's low tax ratio is undetected or unrecorded community businesses or “shadow economics.” This study aims to identify obstacles in optimizing tax revenue, analyze key factors, and compile potential policy paths for optimizing tax revenue in Indonesia with prospective analysis (MICMAC and MULTIPOL). The MICMAC analysis technique is used to analyze key factors in tax optimization, while the MULTIPOL analysis technique is used to compile potential policy paths based on scenarios. Identification of obstacles to optimizing tax revenue is reviewed based on three blocks, namely obstacles and challenges in the economic sector, obstacles and challenges coming from the tax authorities, and from taxpayers. The influencing variables of tax optimization are tax incentives, organizational structure and internal systems, integrity of tax officers, tax regulations and fiscal policies, and inflation. The results of the MULTIPOL analysis conducted in two scenarios, i.e., optimizing state tax focused on expanding the tax base, while local tax with strengthening tax extensification. In order to encourage optimization of the tax system, it can be obtained through a program to expand cooperation with related stakeholders/tax authorities, socialization and tax education to the public, and strengthening data analysis and systems for the validity of priority supervision targets.