QuickTake Q&A: Indonesia Is Latest to Try Amnesty as Tax Lure

Indonesia has begun counting tax receipts as part of an amnesty that aims to recover as much as 560 trillion rupiah ($42.7 billion) that individuals have hidden abroad. President Joko Widodo, known as Jokowi, hopes to boost government coffers by as much as 165 trillion rupiah this year, but the central bank estimates a more modest 53 trillion rupiah. About 3.7 trillion rupiah was declared in the first two weeks of the amnesty, which runs until March 2017. The Indonesian economy, the biggest in Southeast Asia, has been growing well below its potential and the government needs revenue to finance an ambitious agenda.

Coal and gold prices, which help drive Indonesia’s economy, are down. That means Jokowi needs to boost revenue wherever possible. The budget deficit is forecast to reach 2.5 percent of gross domestic product this year, close to the mandated ceiling of 3 percent. Jokowi says he needs more than $400 billion to fund infrastructure plans that include constructing ports, roads and railways. The state budget can finance about 40 percent of that, with 31 percent coming from private investors. The revenue from the amnesty will also be used to finance rural development, health care and education.