Tax Amesty is not a new thing so it would be better if we learn from similar programs that were applied by other countries to give an idea for the pros and cons.
Most of the countries has applied TA, including USA, Australia, Belgium, France, Ireland, Italy, Argentina, Bolivia, Colombia, Chile, Ecuador, Mexico, Panama, Peru, and Philippines.
Sri Mulyani mentioned some of the countries that has succeed it. Italy applied the TA policy with a limited amnesty of penalty and administrative fine for repatriation fund from other countries. India has succeed it to repatriate and encourage the underground economy and informal economy to be a honest taxpayer. Meanwhile, South Africa also applied for national reconciliation.
Benno Torgler, Christoph A. Schaltegger, and Markus Schaffner in their research of “Is Forgiveness Divine? A Cross-culture Comparison of Tax Amnesties,” describes several programs in Costa Rica and Switzerland. They found that TA efficiency will be bigger if taxpayers may determine whether the policy could be issued or not. They also found that TA was repeatedly performed which could reduce its efficiency in short term. TA plays an important role to succeed the tax reform in Costa Rica.
The paper by Alm et al with a title of “Do Tax Amnesties Work? The Revenue Effects of Tax Amnesties During the Transition in the Russian Federation” concludes that the developing countries are advised not to apply TA because it will be a long-term permanent impact towards the tax revenue, which was agreed in the previous research that showed higher tax compliance in developing countries than developed countries; and TA also has potential to give unwanted result in long-term period.
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