Reassessment of the contribution of taxation to the formation of fiscal potential and economic growth in Indonesia

Reassessing the contribution of taxation to fiscal capacity and economic growth in Indonesia is a significant and pressing issue facing the country's contemporary economy. Taxation is a key source of government revenue, essential for funding infrastructure development, social programs, and other strategic public policy areas. This study focuses on analyzing the dynamics of the tax coefficient and the public debt-to-GDP ratio for the period 2014–2024, as well as their impact on economic growth indicators. The study utilizes quantitative statistical analysis methods based on data from official sources, such as the Central Statistics Office, the Ministry of Finance, and other government agencies. By analyzing the relationship between the tax burden, debt burden, and economic indicators, it is possible to identify trends and draw conclusions about the effectiveness of tax policy, as well as identify opportunities to increase the country's fiscal capacity. The study offers recommendations for optimizing the tax system to achieve sustainable economic development and improve tax compliance in Indonesia. A quantitative descriptive approach is used in the study. The information base was secondary data obtained from publications of the Central Bureau of Statistics Indonesia (BPS), the Ministry of Finance of the Republic of Indonesia, and state budget documents. Data analysis was performed using IBM SPSS Statistics software through descriptive statistics, trend analysis, and Pearson correlation analysis. This study examines the relationship between the tax ratio, the public debt-to-GDP ratio, and Indonesia's economic growth (2014–2024) within a single analytical model. The study also uses current data covering the COVID-19 pandemic period and the economic recovery stage, providing a more current and comprehensive understanding of the state of Indonesia's fiscal system over time. The results indicate that Indonesia's tax system has a more pronounced impact on the structure of public financing than on short-term economic growth. Increased tax revenues help reduce the government's dependence on debt financing, which strengthens the country's fiscal sustainability.