The Architecture of Tax Legal Framework

Paying tax is one of our civic duty, an obligation required by the law. This ‘taxpayer action’ performed an integral part of citizen responsibility to society. Instead, this obligation is not automatically provoking people to be aware of the importance to pay the ‘fair share’ amount of tax. People tend to avoid to pay their fiscal obligation or try to minimise their tax burden to pay less contribution to the government and society.
Why is so important to pay 'fair share' amount of tax?
Theoretically speaking, the tax has a function of 'social-welfare'. Individual and/or legal entity will contribute to the government revenue by paying tax from its income/ profit. This revenue then 're-distribute' by the government to the vital sector of public service or facilities, thus can be enjoyed- not only by the taxpayer that already paid - nonetheless enjoyed by the whole society.  This is what we called with 'Benefit-Received' principle.
Nevertheless, this function will be failed if the taxpayer never paid their 'fair share' amount of tax, impacting the public sector such as education, healthcare, public transportation thus shifting the tax burden to the 'poorest' member of the society, maximizing the economic gap between the member of society.
How come not paying our fair share amount of tax can affect another member of our society?
Let me explain this.
Developing countries like Indonesia heavily relied on tax revenue. In 2020 Indonesia State Budget (APBN/ Anggaran Pendapatan dan Belanja Negara), expected total revenue will be Rp. 2.233,2 Trillion ($ 160 Billion) consist of Rp.1.865 Trillion ($ 132 Billion) from tax revenue which is more than 83% state budget revenue is from tax revenue[i]. Another source will come from customs duties, a state-owned enterprise, capital revenue, foreign aid or foreign debt and grant funds (dana hibah). Tax revenues were derived from 31% of other taxes on goods and service, 22% from Corporate Income Tax (CIT), 19% of Personal Income Tax (PIT),  12% from Value Added Taxes (VAT) of good and service, 12% from other taxes and 3% of social security contribution[ii].
Imagine if many of the Corporate taxpayers choose to minimise their tax burden by shifting the profit to other low tax jurisdiction, moreover paying a little amount of tax from what they are supposed to pay (fair share of tax) in Indonesia, eroding the revenue base. As we know, the high-income earners such as Multinational Enterprise/Company (MNEs) can simply performing tax planning more than those of Small-Medium Enterprise (SMEs) who have lower income.
This creating a gap as the MNEs will receive the benefit from the public facility at the same time with SMEs even without MNEs paying the 'fair share' amount or the amount that they supposed to contribute to the government and will affect the business competition. With the eroding tax revenues, the government must exploit another source of revenue which is usually the 'foreign debt'. However, foreign debt has a significant negative effect on the economic development of the country in the future, just like a 'domino effect', debt crisis can lead to the financial and economic crisis of the countries, lesson learns from Greek Debt Crisis in 2009.
Owing to the fact, it is important to maintain taxpayer compliance to contribute to the 'fair-share' amount of tax, not just simply 'already' paying the tax without clarifying the 'fair share amount'.