TEMPO.CO, Jakarta - Finance Minister Sri Mulyani Indrawati on Monday forecasted that tax reform would potentially reduce the tax gap to a normal level or relatively comparable to that of the global scale. In a meeting with members of the House's Commission XI today, she voiced her intention to reduce the current 9.5 percent gap.
“There will always be a tax gap but the international benchmark, especially among OECD members and other emerging nationals, is around 3.6 percent, which is deemed as a normal tax gap,” said Sri Mulyani in the House meeting virtually aired on June 28.
She said the tax treatment among all sectors would be similar without no exemptions or thresholds if the tax regime was 100 percent abided by, despite acknowledging that tax collections will never log 100 percent across developed countries.
Sri Mulyani explained that tax reform consisted of administration and policy reform and said to House legislators that the government must be able to see the tax basis and competitiveness in the economy or among countries.
“Reducing distortion and exemption that creates loopholes and improving the principle of progress or justice,” said Minister Sri Mulyani.
During the House meeting, she also mentioned that the middle income groups were willing to contribute but are not ready to ace the complicated tax administration system.