AXES IN INDONESIA: A LOOK AT THE HISTORY AND RULES OF THE GAME AND WHAT THE ACTUAL EFFECTS ARE

Abstract

This article discusses the vital role of taxation as the main source of state revenue that supports national development and enhances public welfare in Indonesia. Taxes serve as the backbone of the country’s economy, as most government activities rely on tax income to fund infrastructure, public services, and social programs. Using a qualitative literature review approach, this study explores the historical development of Indonesia’s tax system—from the colonial era to the current reforms aimed at transparency, fairness, and sustainability. The discussion also covers the legal foundations of taxation and its significant function in maintaining economic stability. Beyond being a financial instrument, taxation also plays a crucial role in income redistribution, inflation control, and reducing inequality. However, several challenges still exist, including low taxpayer compliance, limited public understanding of tax benefits, and lingering negative perceptions toward the tax system. These issues hinder the effectiveness of tax collection and its potential impact on national progress. Therefore, strengthening tax education and promoting awareness of civic responsibility are essential to build a fairer, more transparent, and sustainable taxation system that contributes to Indonesia’s long-term development and prosperity.