Open AccessLITERATURE REVIEW IMPACT OF TAX AND SUBSIDY ON REDUCING INCOME INEQUALITY IN INDONESIA
Author(s) -
Sakti Prabowo
Publication year - 2017
Publication title -
jurnal pajak indonesia (indonesian tax review)
Language(s) - English
Resource type - Journals
ISSN - 2599-0535
DOI - 10.31092/jpi.v1i1.165
Subject(s) - subsidy , economics , fiscal policy , inequality , economic inequality , government spending , order (exchange) , public economics , government (linguistics) , tax policy , income tax , economic policy , tax reform , macroeconomics , welfare , finance , market economy , mathematical analysis , linguistics , philosophy , mathematics
Many countries have used fiscal policy Tax and subsidy as a tool to reduce income inequality and many of them have succeeded to achieve it. In contrast, tax and subsidy in Indonesia tend to have a neutral effect on inequality today. This research aims to identify the factors caused Indonesia fiscal policy doesn't have a significant impact on income inequality reduction and what steps should be taken by the government to improve the role of fiscal policy in order to reduce income inequality. From the literature review, this paper finds that Indonesia should improve the quality of public spending. Indonesia government should Prioritize social spending and infrastructure to improve the fiscal policy role to reduce inequality. In addition, increasing direct tax such as personal income taxes should be done in order to make it more effective.