Tax Administration versus Tax Rates: Evidence from Corporate Taxation in Indonesia
Name
Tax Administration versus Tax Rates.pdf
Size
1.19 MB
Format
Adobe PDF
Checksum (MD5)
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Author(s)
Basri, M. Chatib
Felix, Mayara
Hanna, Rema
Olken, Benjamin A.
Date Issued
December 1, 2021
Journal
American Economic Review
Publisher
American Economic Association
Citation
Basri, M. Chatib, Mayara Felix, Rema Hanna, and Benjamin A. Olken. 2021. "Tax Administration versus Tax Rates: Evidence from Corporate Taxation in Indonesia." American Economic Review, 111 (12): 3827-71.
Version
Final published version
Abstract
We compare two approaches to increasing tax revenue: tax administration and tax rates. We show that when Indonesia moved top regional firms into “medium taxpayer offices,” with high staff-to-taxpayer ratios, tax revenue more than doubled. Examining nonlinear changes to corporate income tax rates, we estimate an elasticity of taxable income of 0.579. Combining these estimates, improved tax administration is equivalent to raising top rates on all firms by 8 percentage points. On net, improved tax administration can have significant returns for developing countries. (JEL H25, H26, K34, O17).
Subjects
Economics and Econometrics
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1257/aer.20201237
