Analysis of the Effect of Tax Revenue on Poverty Rates in

Indonesia in 2019 - 2020

Qarra Salma Setiawan1 Rizki Insan Fallahi2 Roro Putri Setianingayu3 Yudistira
Widinugroho4
Abstract
This research we take topic of tax effects on poverty due to the issue of poverty in
developing countries, especially Indonesia remains issues that continue to be in
the spotlight. This research method uses descriptive analysis research method.
Descriptive analysis is a problem solving method by describing, describing,
explaining, and analyzing the situation and the main problem situation from the
author's point of view, based on the results of supporting literature review and data
collection with literature studies. Tax is a mandatory government contribution
borne by an individual or mandatory institution. Its nature is based on law, there
is no direct compensation and it is used for the needs of the nation for the greatest
prosperity of the people. In the economic literature, taxes are a very important part
of business management. Poverty is the inability of a person to meet the minimum
basic needs for a decent life. The problem of poverty seems unsolved in Indonesia,
and problems related to the low cost of living in the region continue to increase
from year to year. The relationship between taxes and poverty leads to the
conclusion that profits must be generated from taxes themselves. Correlation,
taxes are one way to break the chain of poverty and improve the welfare of society,
especially the lower class. According to BPS data, there has been a decline in tax
revenue in Indonesia from 2019-2020, namely in 2019 by 1,546,141.90 in 2020
to 1,404,507.50. and the percentage of poverty depth in 2020 increased by 0.13
from 2019. The percentage of severity of poverty in 2020 increased by 0.05
percent from 2019. The percentage of the poverty line in rupiah per capita per
month increased by 4,023,500 from 2019.
Keywords
Poverty, taxes, economy.

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 Introduction
In this study we take the topic of the effect of taxes on poverty. We took this topic
because the issue of poverty in developing countries, especially Indonesia is still an issue
that continues to be in the spotlight. One of the requirements for a good research is the
availability of data relevant to the topic or problem taken, data from tax revenues and the
percentage of poverty in Indonesia have met the research requirements because the
available data are complete.
Developed countries are countries that have reached the maximum target for that
level of the welfare of the people. Meeting people's needs for goods and services and
optimizing, the budget or income in a country is one of the important indicators to become
a country with level of community welfare that is able to achieve the planned targets. As
developing Indonesia is expected to be able to achieve the goals of welfare and decent
living for all Indonesian people, both for the level of health education, as well as a decent
standard of living. However, if you look at the reality or actual conditions, the level of
welfare and poverty still high in Indonesia.
This can be seen from the percentage of poor people in March 2020 which rose to
9.78 percent, which was quoted from the official BPS website. It is closely related until
the Covid-19 virus pandemic which was first discovered in Wuhan, China until finally
spread to all countries in the world, including Indonesia. The pandemic is one of the
factors hamper the economy of a country, it is not wrong if the poverty rate increases
because pandemic, because of the difficulty of meeting basic needs, let alone having to
pay taxes. When tax revenue declines, subsidies for people's lives and welfare will also
be difficult to meet. Every country has income that comes from community economic
activities, both from domestic community and people working abroad. One of the income
of a country comes from tax.
Materials and Methods
This research is a descriptive analysis research. Descriptive analysis method is a
method or method work in problem solving by describing, describing, explaining and
analyzing the situation and condition of a problem object from the author's point of view
based on the results from a review of the supporting literature (library study). Data

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collection through literal study (library) study). Literature study is carried out by
collecting data in the form of secondary data related to topics and issues related to tax
revenue and poverty percentage in Indonesia from 2019 - 2020.
Literature Review
Tax is a mandatory state contribution owed by an individual or entity that is
coercive in nature based on the law, with no direct compensation and is used for the needs
of the state for the greatest prosperity of the people. In the economic literature, taxes are
a very important component in running the economy. Tax is a tool for the government to
influence its fiscal policy, namely to influence economic activity in society. Therefore,
the government plays an important role in all matters related to taxation so that it can
make the economy stable.
Poverty is an individual's inability to meet the minimum basic needs for a decent
life. The problem of poverty is a problem that seems unresolved in our country, even from
year to year various problems related to the low cost of living of the people continue to
increase. According to BPS (2007) there are main indicators that people can be said to be
poor, if one of the following indicators is met: (1) Limited adequacy and quality of food;
(2) Limited access and low quality of health services (3) Limited access and low quality
of education services; (4) Lack of job opportunities; (5) Weak protection of business
assets and wage differentials; (6) Limited basic needs (clothing, food, and housing); (7)
Limited access to clean water; (8) Lack of savings; (9) Deteriorating conditions of the
environment and natural resources; (10) The absence of insurance and social security;
(11) Absence of participation; (12) Widespread corruption and weak guarantee of
security.
Taxes have a very important role in the life of the state, especially in the
implementation of development because taxes are a source of state income to finance all
expenditures including economic growth expenditures. Various steps have been taken by
the government to reduce poverty, such as the provision of subsidies in the form of Direct
Cash Assistance to help the poor meet their basic needs, School Operational Assistance
which is useful to assist in operational and educational facilities for the community and
other programs aimed at reducing poverty both in rural areas and in rural areas. both urban

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and rural areas. All of this assistance comes from taxes paid by the upper middle class,
which means that the government carries out its duties as a mediator for the reallocation
of the tax.

Results
Breaking the chain of poverty in Indonesia is not only a matter of micro or
individual. but there needs to be improvements to public service facilities which provide
assistance for these services to the people of the lower middle class. The relationship
between taxes and poverty leads to the conclusion that there must be benefits resulting
from the tax itself, the correlation is how taxes become a way to break the chain of poverty
and in order to prosper the community, especially the lower classes. Poverty is a condition
of economic inability to meet the standard of living of the average community in an area.
This inability condition is characterized by the low ability of income to meet basic needs
in the form of food, clothing, and housing. This low income ability will also have an
impact on the reduced ability to meet the average standard of living such as public health
standards and education standards. The condition of the people who are called poor can
be identified based on the ability of income to meet living standards. In principle, the
standard of living in a society is not only the fulfillment of the need for food, but also the
fulfillment of the need for health and education. Decent place to live or settlement is one
of the standard of living or standard of community welfare in an area. The definition of
poverty that is currently popularly used as a development study is poverty that is often
found in developing countries and third world countries. The problem of community
poverty in these countries is not just a form of income incapacity, but has expanded to
social and political powerlessness. Poverty is also considered as a form of development
problem caused by the negative impact of unbalanced economic growth so that it widens
the income gap between communities and income gaps between regions. The definition
of poverty is formed based on the identification and measurement of a group of people or
groups, hereinafter referred to as poor. In general, every country including Indonesia has
its own definition of a person or a society categorized as poor. This is because conditions
called poor are relative to each country, for example economic conditions, welfare

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standards, and social conditions. Each definition is determined according to criteria or
measures based on certain conditions, namely average income, purchasing power or
average consumption ability, educational status, and health conditions.
Taxes play an important role in the Indonesian economy, in an effort to reduce
taxes, it is one of the government's efforts to provide subsidies to the community, finance
reproductive expenditures, such as expenditures that provide economic benefits for the
community, such as spending on irrigation and agriculture. Non-self-liquidating and non-
reproductive. To finance non-self-liquidating and non-reproductive expenditures, the
public will receive indirect feedback, such as improving public facilities and
infrastructure, thereby encouraging economic activity. In addition, when the facilities and
infrastructure are better, it can reduce production costs, so that community productivity
increases.
Tax Revenue Data in Indonesia for 2019 - 2020

Source of Tax Revenue 2019 2020

Domestic Taxes 1.505.088,20 1.371.020,60

Income Tax 772.265,70 670.379,50

Value-added Tax dan sales Tax on Luxsury Goods 531.577,30 507.516,20

Land and Building Tax 21.145,90 13.441,90

Fee for the Acquisition of Land and/or Building Rights. 0,00 0,00

Excise 172.421,90 172.197,20

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 Other Taxes 7.667,30 7.485,70

International Trade Tax 41.053,70 33.486,90

Import Duty 37.527 31.833,80

Export Tax 3.526,70 1.653,20

There was a significant decrease in domestic tax, which was 134,067.6. Income tax
decreased in 2020 by 101,886.2, which is the calculation of the difference from 2019,
Value Added Tax and Sales Tax on Luxury Goods decreased by 24,061.1. Land and
Building Tax decreased by 7,704. Excise duty decreased by 224.7, other tax decreased by
85,143, international trade tax decreased by 9,219.9, import duty decreased by 5,693.2,
export tax decreased by 1,909.48. From the table above, we can see that there was a
decrease in tax revenue from 2019-2020, namely in 2019 by 1.546.141.90 in 2020 to
1.404.507.50
Poverty percentage table 2019 – 2020

Year 2019 2020

113.65 134.01
Poor (000) inhabitants

3.81 4.38
Percentage of Poor
Population (P0)

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 0.47 0.60
Poverty Depth (P1)

0.10 0.15
Poverty Severity (P2)

617718.00 657953.00
Poverty Line (Rp
Percapita/Month)

From the table above, we can see that there has been an increase in the number of poor
people in Indonesia, namely in 2019 from 113.65 thousand in 2020 to 134.01 thousand.
The percentage of poverty depth in 2020 increased 0.13 from 2019. The percentage of
poverty severity in 2020 increased by 0.05 percent from 2019. The percentage of the
poverty line in rupiah per capita per month increased by 4,023,500 from 2019.

In order to encourage and also increase state tax revenues as an effort to reduce
poverty in Indonesia, this can be done in several ways, including improving the quality
of the tax apparatus. Holding job training seminars aimed at increasing interests and
talents, in addition to improving the skills and knowledge of each member. tax
apparatus, supervising and evaluating the tax apparatus Local governments hold
meetings to assess, evaluate, and correct if there are actions by the tax apparatus that
are not in accordance with the rules, revoke business licenses for taxpayers who
manipulate taxes, some taxpayers pay taxes, sometimes there are those who do not.
not in accordance with actual income or potential, making online tax information and
payment services especially during the Covid-19 pandemic, many people do activities
at home, so that with online payment services through applications on smartphones it
will facilitate the community and become more effective and efficient.

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 From the statements and explanations above, the relationship between taxes and
poverty is very strong. Where subsidies obtained from taxes can greatly help the
community in meeting the needs of daily life. Poverty is still a problem that occurs in
every generation and must immediately break the poverty chain. Taxes can be one way
to overcome this. The chain of poverty must be broken by providing basic services,
such as education, health, clean water and sanitation to poor families. To be able to
provide these basic services, the State needs sources of funds that come from taxes.
Taxes are one of the most important instruments because they can distribute income
from the rich to meet the social needs and basic services of the poor. Therefore, paying
taxes is one of the obligations of citizens and a real form of community contribution to
the state with the aim of prospering people's lives.

Conclusion
Poverty in developing countries, especially Indonesia, is still an issue that
continues to be in the spotlight. The problem of community poverty in Indonesia is not
just income inadequacy, but has extended to social and political powerlessness. Taxes
have a very important role in the life of the state. Taxes are one way to break the chain
of poverty and in the context of the welfare of the community. When tax revenues
decline, subsidies for people's lives and welfare will also be difficult to meet. According
to BPS data, there has been a decline in tax revenues in Indonesia from 2019-2020,
namely in 2019 by 1,546,141.90 in 2020 to 1,404,507.50. When tax revenues decline,
subsidies for people's lives and welfare will also be difficult to meet. The occurrence of
the pandemic at the beginning of 2019 made it increasingly difficult to be able to meet
basic needs, let alone have to pay taxes. This resulted in an increase in the number of
poor people in Indonesia, namely in 2019 from 113.65 thousand in 2020 to 134.01
thousand.

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Acknowledgments
Praise the presence of God Almighty, for the abundance of His Grace and Grace,
so that the author can complete a paper entitled: Analysis of the Effect of Tax Revenue
on Poverty Rates in Indonesia in 2019 - 2020. This is to fulfill one of the requirements
for completing an eye assignment. English courses and in order to complete the credits
of English courses at the Vocational School of Gadjah Mada University. Sincere
appreciation and gratitude to my beloved father and mother who I love who have poured
all love and affection as well as moral and material attention. May God always bestow
grace, health, gifts and blessings in this world and in the hereafter for the kindness that
has been given to the author.
The author's appreciation and gratitude goes to Mr. Muam who has guided us
through this English Practicum course. As well as sayings Thanks to All of my group
friends who have finished together the English practicum assignment this time. for the
people closest to me who always help in the preparation of this paper. Finally, the writer
realizes that in writing this paper, it is still far from perfection. Therefore, the authors
ask for suggestions and constructive criticism for the sake of perfection and may be
useful for all of us.

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