Eradicating Inequalities in Development by Impoverishment and Social Sanction for Tax Corruption

Abstract

Inequalities in development occur in almost developing countries worldwide including Indonesia. This condition is caused by powerlessness of government in fulfilling public interests because of the limitation of national budged as a result of corruption. Currently, corruption spreads to all government institutions including Directorate General of Taxes (DGT) as tax authority in Indonesia. Corruption in the area of DGT becomes an importance issue because it has a broad impact and destructive to economic development and it reduces the public trust toward this institusion. In Indonesia, tax corruption is built by some patterns that have similarities between the study result and testimony from tax corruption actors, in which there is the existence of tax mafia in protecting any corruption cases related to taxes. To eradicade this practice, this study suggests the impoverishment and social sanction as a strategy to provide deterrent effect, to minimize the corruption activities in tax sectors specifically and public sectors in general, to reduce the leakage of budget, and to increase the government income. By these efforts, it is expected the equalities in development to be achieved. To apply them, it is needed the seriousness and strong commitment from government.