Page 2 - Working Paper (Narrowing Tax Gap: Cross Countries Experience)

Narrowing Tax Gap:

Cross Countries Experience

Adri Poesoro 1

This paper reviews methodologies and TABLE OF CONTENTS
empirical estimations of cross-countries’
tax gap and tax effort. Tax gap is the
different between the maximum amounts
of tax revenue to the actual receipt.
1. Introduction ............ 3
Meanwhile, tax effort is defined as an
index of ratio between the share of the
2. The Cause of the
actual collection in gross domestic product
Tax Gap .................... 4
(GDP) and taxable capacity.

3. Tax Capacity
Several variables, such as demographic,
and Tax Effort:
structure of the economy and institutional
Comparative
variables, are included as determinant Studies .................... 6
to actual tax-to-GDP and as factors to
measure tax capacity. This analysis
4. Overview of
also incorporates review and policy Indonesia’s Tax
recommendation on how to contain
Performance ............ 11
shadow economy problems.

5. Conclusion
As part of to inform current level of tax
and Policy
capacity and effort across regions, this Recommendations .. 13
paper also provides recommendations
and strategies to narrow the gap.

1 Adri A. L. Poesoro is a Chief Economist, DANNY DARUSSALAM Tax
Center and a Doctoral graduate from Claremont Graduate University,
USA.

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