Tax Revenue and Income Inequality in Indonesia: A Provincial Level Evidence

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This study examines the relationship between tax revenue and income inequality at the provincial level in Indonesia from 2011 to 2019. It uses a fixed-effect approach and finds that total tax revenue has no significant effect on income inequality. The finding implies that Indonesia’s current tax system and structure have been unable to contribute to reducing regional income inequality. Similarly, by the type of taxes, both income tax and value-added tax revenue have a relatively insignificant effect. On the other hand, the ratio of local taxes to gross regional domestic product (GRDP) has a considerably positive effect on income inequality, indicating that the majority of consumption taxes in the local tax component are regressive. Moreover, expenditure programs may play a more significant role in reducing regional inequality instead of the tax system
Original languageEnglish
Article number2
Pages (from-to)155-172
JournalJurnal Perencanaan Pembangunan
Issue number2
Publication statusPublished - Aug 2022


  • Tax Revenue
  • Income Inequality
  • Income Tax
  • Value-Added Tax
  • Local Tax


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