Have you ever wondered where the tax money you pay actually goes? It’s natural to feel uncertain, especially if you haven’t truly experienced its benefits. However, in conjunction with National Tax Day, celebrated every July 14, Labamu invites you to understand what taxes are and the benefits they bring when managed properly. Let’s learn together and shift our perspective on taxes—from being seen as a burden to becoming a meaningful contribution to the nation.
The Origin of National Tax Day
According to the Directorate General of Taxes, National Tax Day was first commemorated on July 14, 2018, following the issuance of Director General of Taxes Decree Number KEP-313/PJ/2017 on December 22, 2017, regarding the Establishment of Tax Day.
This date was not chosen without reason. On July 14, 1945, during a BPUPKI session, the idea of tax collection was discussed for the first time as part of the foundation for state administration. The session was led by Dr. KRT Radjiman Wedyodiningrat, a figure who later became known as the Father of Indonesian Taxes.
Although he had a medical background, Dr. Radjiman understood that a country could also “fall ill” if it failed to manage taxes wisely. Conversely, the people could become unruly if taxes were imposed arbitrarily without accountability. For this reason, Dr. Radjiman emphasized the importance of fair tax regulations and a carefully managed taxation system.
The commemoration of National Tax Day aims to raise public awareness about the importance of taxes, honor the nation’s historical struggle, and encourage government officials to prioritize the welfare of the people.
What Is Tax?
According to the Directorate General of Taxes, a tax is a mandatory contribution that must be paid by individuals or entities to the state based on the law, without direct compensation, and is used for state purposes to maximize the welfare of the people.
This means that while you may not directly feel the benefits of the taxes you pay, their impact can be seen in public services such as roads, schools, and healthcare facilities.
Meanwhile, according to Investopedia, taxes also serve as the primary source of funding for government programs, ranging from infrastructure development to social security.
On a broader scale, taxes represent a form of national cooperation. When everyone contributes, the state has sufficient resources to fund development and public services.
Why Are People Reluctant to Pay Taxes?
Based on its definition, the intention and purpose of paying taxes are noble, namely to fund development and improve public welfare. However, in reality, many people are reluctant or even try to avoid their tax obligations for various reasons. Here are the most common ones:
1. Not Feeling Direct Benefits
Many people feel that taxes “disappear” without any tangible results. Roads remain damaged, public services are still slow, and assistance never seems to arrive. When the benefits of taxes are not visibly evident, public trust decreases.
2. Lack of Tax Education
Most small business owners are never properly taught how taxes work from an early stage. As a result, they are often confused about obligations, types of taxes, or payment procedures. This confusion makes taxes feel complicated, leading many people to choose to avoid them.
3. Complicated Administrative Processes
The tax reporting process in Indonesia is still quite complicated. In addition to being time-consuming, technical issues and the support services provided by tax officers also require significant improvement. Meanwhile, SME owners are already busy managing daily operations. Faced with complex administrative procedures, their willingness to comply with tax obligations often diminishes.
4. Fear of Penalties or Audits
Rather than feeling secure, some people fear that filing taxes could create new problems. They worry about incorrect entries, underpayment, or even being audited by tax officers. This fear often arises from a lack of understanding of procedures and limited guidance.
5. Negative Perceptions of Tax Management
Cases of public fund misuse or corruption have made many people skeptical of the tax system. Additionally, the lack of transparency makes it even harder for the public to trust that the money they pay is genuinely used for the benefit of society—not misappropriated by officials.
The Benefits of Taxes When Managed Properly and Transparently
As explained Tax Foundationfor more than 5,000 years, taxes have been an important part of government systems around the world. Unlike profit-making businesses, governments do not
Regardless of the pros and cons surrounding its implementation, taxes that are managed properly, fairly, and responsibly can provide tangible benefits to society as a whole. Here are the benefits of taxes, compiled with references from the Directorate General of Taxes:
1. Financing State Expenses
Taxes are the primary source of government revenue used to fund various needs, such as infrastructure development, education, and healthcare services. Without taxes, the state would lack sufficient funds to carry out public programs.
2. Regulating Economic Balance
Taxes can be used to steer the economy, such as controlling inflation or promoting growth in specific sectors. The government can raise or lower tax rates to manage consumer purchasing power or attract investment.
3. Promoting Income Equality
Through taxes, the government can redistribute income to those in need via social assistance or subsidies. This helps reduce the gap between high-income and low-income groups.
4. Maintaining National Stability
Taxes also play a role in maintaining economic stability during crises or market fluctuations. By carefully managing government revenues and expenditures, the state can safeguard the public’s purchasing power. Stable taxation contributes to a calmer and more predictable business environment.
5. Providing Adequate Public Facilities
The construction of roads, bridges, schools, and hospitals is all funded by tax revenue. This means that taxes directly support public access to adequate facilities. Therefore, development is not only the government’s responsibility but also the result of collective cooperation from the people through taxation.
6. Providing Room for Aid and Subsidies
Taxes enable the government to provide cash assistance, energy subsidies, scholarship programs, and job training. Without taxes, such programs would be difficult to implement consistently.
7. Supporting the State’s Role in Serving Citizens
The government cannot function optimally without tax funding. All public services operate with the support of tax revenue. Therefore, paying taxes is not just an obligation but a tangible contribution to ensuring the state remains present for its citizens.
National Tax Day is not just a symbolic moment but a reminder that we all have a role in nation-building. For SME entrepreneurs, paying taxes is also part of the journey toward running a professional and sustainable business.
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