Estimating the Impact of Tax Reform Administration Policies: Evidence from Indonesia

In 2002, Indonesia’s Directorate General of Taxes (DGT) launched a comprehensive reform of the tax administration. Among other interventions, performance incentives were overhauled, the organizational structure of tax offices was modified, and IT systems were upgraded to streamline data collection and facilitate tax filings. Using quasi­-experimental research designs, Harvard professor Rema Hanna, MIT professor Ben Olken, and former Minister of Finance of Indonesia M. Chatib Basri are collaborating with Indonesia’s Ministry of Finance (MoF) and DGT to evaluate the effectiveness of those various complex reform policies. This partnership aims to not only inform MoF’s ongoing tax reform, but to open opportunities for further testing of tax policies through randomized evaluations and to share results from relevant RCTs to the current administration, institutionalizing the use of evidence and building capacity at MoF and DGT.