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Roy Kelly co-authors report for the World Bank

The professor of the practice explored personal income tax piggybacking as a potential subnational revenue instrument in Indonesia.

Dr. Roy Kelly, professor of the practice of public policy in the Duke Center for International Development and Sanford School of Public Policy, co-authored “Personal Income Tax Piggybacking,” a report published by the World Bank.

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Roy Kelly
Roy Kelly

Kelly and co-authors Muhammad Khudadad Chatta, economist in the Governance Global Practice of the World Bank, and Jürgen René Blum, senior public sector specialist at the World Bank, worked closely with the Ministry of Finance Indonesia to analyze the potential introduction of personal income tax (PIT) piggybacking in Indonesia.

“Personal income tax (PIT) piggybacking is a local surcharge levied by subnational governments (SNGs) on top of the taxable personal income or on the personal income tax liability already being levied by the central government,” the authors explained. “In contrast to tax sharing arrangements, piggybacking provides more SNG autonomy since the SNG is granted the power to set and levy the piggybacking rate, typically within certain bounds established by the central government, thereby strengthening the accountability between SNGs and their residents.”

The authors found PIT piggybacking in Indonesia could increase district own-source revenues by an average of 8.3%, strengthen SNG accountability to their taxpayers, and provide the government with increased flexibility to address economic downturns in the future.

They also outlined the conditions that would need to be met prior to implementation and provided recommendations for the Government of Indonesia to prepare for the possible introduction of PIT piggybacking.

Prior to joining the Duke Center for International Development, Kelly spent 19 years with Harvard University at the Harvard Institute for International Development, The Harvard Kennedy School and the Harvard Law School International Tax Program. He has more than 40 years of experience in teaching, designing and implementing public sector management reforms in Asia, Africa, Latin America and Eastern Europe.

Kelly earned his PhD in urban planning from Harvard University.

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