A Legend Lady Godiva Files a Lawsuit for Tax Justice

It is said that in the town of Coventry, England in the early Middle Ages, there was an Anglo-Saxon noble named Lady Godiva protesting to her husband, Lord Leofric of Mercia. The reason is, Lady Godiva considered her husband’s decision to raise taxes unfair to the common people. Dizzy with his wife’s protests, Lord Leofric said he would lower taxes if his wife would walk the streets of Coventry naked on horseback in broad daylight.

Feeling certain that his conditions would not be met, he was surprised when his wife agreed. It is said that Lady Godiva launched her action on July 10 1040. Because of her efforts, taxes were reduced and the common people felt tax justice.

In modern times, tax justice is achieved through law, rather than action as Lady Godiva did. In 2021, the government issued Law (UU) Number 7 of 2021 concerning Harmonization of Tax Regulations (HPP) with three schemes that uphold the principle of tax justice.

the lower limit of taxable income for individual taxpayers has changed from IDR 20 million to IDR 30 million. Does it mean that the tax levied will increase? Precisely with this policy, middle to lower income people will pay lower taxes than the provisions before the HPP Law came into force.

For example, people with a taxable income of Rp. 30 million a year will pay taxes of Rp. 300,000 a year. This value is lower than the tax that had to be paid before the HPP Law came into force, which was IDR 200,000 a year.

Taxable income is calculated from net income less non-taxable income (PTKP). So, for example, a taxpayer with a net income of IDR 2.5 million a month or IDR 30 million a year minus PTKP IDR 24 million (single status), then his taxable income is IDR 2.5 million. This value will be multiplied by the rate in the first layer by 5%. Thus, he has to pay taxes of IDR 125,000 a year or IDR 10,000 a month. In this condition, both before and after the HPP Law came into effect, the tax that had to be paid was the same.