The Bank of Italy has estimated that in the first six months after its implementation in Sept. 2009 its country’s tax amnesty policy attracted ¤97 billion (US$110.5 billion) back into the country, or almost 20 percent of the total Italian assets parked overseas of ¤500 billion, as estimated by the central bank.
The tax amnesty implemented in Italy only gave pardons to tax evaders under tax-related crimes, not for general crimes, which is the proposal floated by the Indonesian government, said Yustinus, who once acted as advisor to President Joko “Jokowi” Widodo in the President’s TOPP.
Euben Paracuelles, a Singapore-based economist with Nomura Holdings, noted that an amnesty was voluntary by definition so its successful enforcement — even after granting pardon to general crimes — would remain an open question. “I think market participants will be skeptical about this,” he noted.
“The government needs to convincingly establish the extent of these so-called funds from financial crimes and whether this will have a significant impact. Otherwise, this policy will be seen as barking up the wrong tree,” explained Paracuelles.
Indonesia’s tax-to-gross domestic product (GDP) of around 11 percent is among the lowest in Southeast Asia. This year, Jokowi has instructed his ministers to broaden the country’s tax base, with the President aiming for a 30-percent year-on-year increase in tax collection, which is expected to hit Rp 1.29 quadrillion this year.
However, with the Finance Ministry already declaring that 2015 would be an “education year” for compliant taxpayers, the implementation of a full-fledged tax amnesty would be a contrast to such a mission and, particularly, would tarnish Jokowi’s anticorruption commitment, economists have said.