Tax urgency is a mandatory contribution paid by the people to the state without direct contra-achievement and will be used for the benefit of the government and the general public. Taxes have two important functions in the economy of a country. First, taxes are one of the sources of government funds for development, both central and local governments. Both taxes function as a tool that regulates government policies in the socio-economic field.
Tax urgency has a very important role in the life of the state, especially in the implementation of development because taxes are a source of state income to finance all expenditures including development expenditures. On the other hand, taxes are also very important in regulating economic growth through tax policies. Taxes have several functions, including:
1. The budget function (Budgetair) is that taxes are used as a tool to optimally enter funds into the state treasury based on applicable tax laws, so that taxes function to finance all expenses related to the government process.
Taxes are used for routine financing, such as: expenditures, employees, goods expenditures, maintenance, and others. For development financing, money is removed from government savings, namely domestic revenues minus routine expenditures.
The government savings are continuously increased from year to year according to the increasing need for development financing.
2. Regulating function (Regulerend), ie taxes are used by the government as a tool to achieve certain goals and complement the budget function. The government can regulate economic growth through tax policies.
Example :
In the context of investment, both domestically and abroad, various kinds of tax relief facilities are provided. In order to protect domestic production, the government imposes high import duties on foreign products.
3. Stability function, namely taxes make the government have funds to carry out policies related to price stability, so that inflation can be controlled. This can be done by regulating the circulation of money in the community, tax collection, effective and efficient use of taxes.
4. The function of income levies, namely taxes used to finance all public interests. Including to finance development so as to open up job opportunities, so as to increase people’s income.
Taxes are the main source of state revenue. Without taxes, most state activities are difficult to carry out. The use of tax money covers everything from personnel expenditures to financing various development projects. The construction of public facilities such as roads, bridges, schools, hospitals/health centers, police stations is financed using money from taxes. Tax money is also used for financing in order to provide a sense of security for all levels of society.
