Abstract
This study attempts to analyze the impact of the indirect taxes levy on the plantation sector in Indonesia. The aim of this study is to investigate the assumptions that the disincentive fiscal policy could generate some trade offs against some other economic variables i.e. National GDP level, Domestic Prices, total Exports and Imports, Poverty Rates, Government Revenues and Government Consumption Expenditures. This study employs the inter-regional CGE model with bottom-up approach and applying the Indonesian Social Accounting Matrix. The empirical results showed that, overall the disincentive fiscal policy in the plantation sector could give positive impacts not only to the area of the production forest sector, but also to the increasing number of the natural forest area in Indonesia. However, the implementation of this policy has some trade offs against some other economic variables.
Highlights
The implementation of regional autonomy in Indonesia nowadays is a part of the decentralization process
The simulation scenario examine the initial conditions before tax policy implementation and afterwards the policy enforced
Land use in the production forests sector (FORES) in Sumatera region increase by 72.074 million ha, as in the scenario 2, the land use of production forest sector only increased by 67.032 million ha
Summary
The implementation of regional autonomy in Indonesia nowadays is a part of the decentralization process. In the year 2009, approximately 2106 drafts (from total 4858 drafts evaluated) of local regulations regarding tax and retributions were called off by the central government, since it were pondered as disruption for the local investment development, as well as causing high cost economy (DGFB, 2012). The law is granting the local government to have full authorization in imposing the land and building tax By transferring such authority to the local government, the central government expect that the local own revenue will increase augmentedly (MOF, 2009). In addition to those policies, the central government has another discourse to impose indirect tax on plantation which the subject matters currently part of the central government authority. Based on the aforementioned background, this study was conducted in order to provide different kind scenarios of the indirect tax policy impact which (1) imposed by the central government or (2) imposed by the local government
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