Institutional Reform Must Precede Tax Reform for Success

A few weeks ago, one of the country’s largest protests took place, with tax policy among the main demands. The rally highlighted that Indonesia’s tax‑to‑GDP ratio is only about 10 %, well below many neighboring countries. Participants called for greater government accountability in tax collection.

Countries such as Sweden and Denmark enjoy tax ratios above 40 % and rank among the cleanest and most trustworthy governments worldwide. Their success rests on strong, transparent institutions that earn public trust. This demonstrates that institutional quality is essential for voluntary tax compliance.

Therefore, comprehensive institutional reform should precede any increase in tax rates or the introduction of new taxes. Without public confidence, higher taxes are unlikely to boost revenue significantly. Read the full source at news.ddtc.co.id (https://news.ddtc.co.id/review/opini/1814675/reformasi-institusi-mestinya-mendahului-reformasi-perpajakan).