Nurhadi-Aldo, Taxes, and Free Rider

In the second quarter of 2019, Indonesia held the biggest people’s party to start a new chapter in its government. At that time there was a typical “public figure” with jargons appearing (or more accurately being raised). Their presence has carved the smile of the people who are bored due to the polarization caused by the people’s party. Let’s say their names are Nurhadi-Aldo.

Nurhadi-Aldo is not a noble couple who is adored by a group of people because of their wealth. Nor are they a couple from a middle-level economic group that moves through an independent path. They are a fictitious presidential election candidate pair number 10 made by a group of young people scattered in various regions. They were “created” because a group of young people felt stifled by the black campaign that was happening at that time.

The fictional presidential candidate pair is famous, in its own way. They are famous for quotes that can be said to be typical of the Red Light District belonging to the Tulip Flower Country. However, they also still have quotes typical of the lower middle class economy. In this article, of course, the author will not discuss sensual quotes. Here the author will try to discuss quotes related to the economy, then its relation to taxes.

Free Rider

As for some of their quotes that are closely related to the state, namely, “The work will be easier if it is not done” and “If other people can do it, why should we?” These two quotes indicate the presence of a member of the public who wants to become a free rider. Free rider itself is defined as “… A group of students who have been assigned to do a report where only one student cares, does all the work and the others go along for a free ride” (Johnson and Johnson, 1882).

Free riders can be present in every aspect of life (horizontally) and at all levels of society (vertical). He can attend elementary school (SD) to college, at night patrols, to a country.

When a person becomes a citizen, then that person has the rights and obligations as a citizen. No government of any country wants its citizens to become free riders. Again, nothing. The same is true in Indonesia. The rights and obligations of Indonesian citizens have been enshrined in the 1945 Constitution (UUD 45).

Tax Function

On the other hand, the state also has obligations to its citizens. To fulfill this, one of them uses a financial instrument called tax. Citing the official link of the Directorate General of Taxes (DGT), taxes have four functions. One of the four tax functions is the budget function. Through this function, taxes will be used to finance state expenditures.

In taxation in Indonesia, DGT refers —one of them — to Adam Smith’s principle of legal certainty. The principle of legal certainty is one of Adam Smith’s famous four maxims. This principle indicates the necessity of a legal basis in the world of taxation. This legal basis is manifested in various forms as is well known, including: the Law on Harmonization of Tax Regulations, the Income Tax Law, the Law on General Provisions and Tax Procedures, the Regulation of the Minister of Finance, to the Regulation of the Director General of Taxes.

Red thread

One common thread that can be drawn between free riders and taxes is that they are at opposite poles. Taxes are used to finance development, while free riders are individuals who use the proceeds from development without participating in financing development. Whereas there is a general axiom which reads, “A person cannot claim his rights if he has not carried out his obligations.” This means that free riders should not be able to ask for their rights (enjoy development facilities) if they have not carried out their obligations (pay taxes).

The reality of implementing public policy is often inversely proportional to the theory that has been made as a baseline. However, therein lies the opportunity for Indonesian citizens to make efforts to remind people in the surrounding environment that if they are still free riders in any form, both in the smallest community to the largest in the form of the state.

The fact of the existence of free riders affecting taxation can be proven by the Organization for Economic Co-operation and Development (OECD) report entitled Revenue Statistics in Asia and the Pacific 2021, Tax Compliance or tax compliance in Indonesia in 2019 is still at 11.6 %. Tax compliance itself can be defined as the willingness of taxpayers to comply with tax regulations in a country (Andreoni, et.al., 1998).

In general, tax compliance refers to the ability and willingness of taxpayers to comply with tax regulations. Its implementation is expected to be in the form of reporting income correctly and paying taxes correctly and on time. The higher the tax compliance, the awareness of taxpayers—most likely—the better. The more aware taxpayers are, the less likely there are free riders in the community.

Please also note that a person will not be taxed if he does not meet the subjective and objective requirements. This premise is also a common guide for living in society. That, we don’t need to be afraid of being taxed if it doesn’t meet the subjective and objective requirements. On the other hand, if a person has fulfilled subjective and objective requirements and has not fulfilled his obligations, then it is natural to be afraid.

The event can be analogous to being in a class. Our friends who do not pay cash contributions tend to be absent for various reasons. In fact, for some cases our friends will be afraid to be in their own class environment. It’s a different story if our friend has paid cash, then he will feel comfortable when in his own class environment.

The same thing happens in a country. Taxpayers who become free riders usually have suspicious behavior. Of course we as taxpayers do not want that to happen in our environment, right? Therefore, it would be nice for us as fellow citizens in Indonesia to remind each other.

Every religion teaches to remind each other. Isn’t the Pancasila the first precept to teach about religious values? Of course, these religious values ​​must be upheld by every Indonesian citizen in every aspect of their lives. One of them, reminding free riders not to be free riders, right?

Despite all the polemics, Nurhadi-Aldo has helped put a smile on every reader of his quotes. The pros and cons that have emerged about them have passed by time. Now, the 2019 election is over. Now is the time to prove ourselves that we are not a free rider for the country we love together. Adieu.