Taxation and Economic Development among Pacific Asian Countries

By Richard A. Musgrave; Ching-Huei Chang et al. | Go to book overview
Save to active project

2
Indonesian Tax Reform, 1985-1990

Malcolm Gillis


1. Introduction

The years 1950-1990 were marked by major alterations in what formerly passed for "received wisdom," not only in taxation but in development finance in general. Lessons of experience were primarily responsible for these changes; improvements in understanding of the economics of the public sector and of inflation also contributed. These shifts were well under way in many developing countries ( Gillis, 1989a) even prior to the much-discussed fiscal revolution in the United States in the 1980s, which culminated in the passage of the Tax Reform Act of 1986.

As recently as the 1960s, the structuralist school, particularly those economists ensconced in the United Nations Economic Commission for Latin America (ECLA), argued forcefully not only that inflation was an inevitable outgrowth of healthy development processes but also that moderate inflation was altogether appropriate as one of the pillars of government finance ( Seers, 1962; Hirschman, 1963). This view was widely accepted for well over a decade, particularly in Latin America. The so-called two-gap macromodels of the 1960s pointed to the criticality of foreign aid in development finance: Both domestic savings and foreign exchange constraints on growth could be greatly relaxed, if not dissolved, by appropriate inflows of foreign aid ( Chenery and Strout, 1966). Later, with the rise of Eurocurrency markets in the 1970s, government resort to foreign commercial borrowing came to be viewed not only as an alternative to foreign aid but in many nations as a substitute for further efforts to mobilize domestic resources through the tax and financial system. Tax systems themselves were commonly fine-tuned in order to achieve a wide variety of nonrevenue objectives. In particular, governments of developed and developing nations alike commonly sought substantial income redistribution through the use of steeply progressive tax rates. Also, complex and largely inadministerable systems of tax

-11-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited page

Bookmark this page
Taxation and Economic Development among Pacific Asian Countries
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen
/ 292

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?