Tax Policy Challenges in the 21st Century

Ganda Christian Tobing

S. 62I. Introduction

The global financial crisis has encouraged many countries to seek new revenue in the coming years. Pressures to raise more revenue and to put the economy back on a high-growth track have led to new policy challenges and the necessity of reform. Some have authors called it as a benefit of crisis whereby a crisis makes the implementation of reform is possible and may even improve welfare. Other authors argue that a crisis might cause a certain sense of urgency, creating a window of opportunity for reform that would otherwise have been blocked, and a chance for policy makers to change their view and adopt the necessary reforms. Nowadays, the necessity of reform has been on the agenda in many countries that face the global financial crisis. One item on the agenda is to raise more revenue and in order to strengthen their economies tax reform is needed.

Tax reform is an ongoing process, in which countries continually adapt their tax systems to reflect changing economic, social and political circumstances. From this definition, one should know that tax reform is not only an event, but more likely a process that involves economic variables and the study ...