Progressive Taxation and Inequality Reduction in Developing Economies

Abstract

Progressive taxation is a central instrument for addressing income and wealth inequality. This paper analyzes Indonesia’s progressive tax instruments and their effectiveness in reducing inequality. Using comparative and normative analysis, the study evaluates personal income tax, property taxes, and luxury consumption taxes. The findings suggest that limited tax base coverage and enforcement challenges constrain redistributive outcomes. This paper contributes to the global tax justice debate by illustrating the structural barriers faced by developing countries in implementing effective progressive taxation. Indonesia’s experience provides insights into the interaction between capital mobility, administrative capacity, and redistribution. The study reinforces the need for international cooperation to support progressive tax systems in developing economies.