Fiscal policy uses government spending and tax rates to influence a nation's economy. It works alongside monetary policy to achieve goals like full employment and price stability. Corruption harms economies and societies. The Gayus Tambunan and Hambalang graft cases in Indonesia involved over 1.5 trillion rupiah lost to tax evasion and bribery that undermined trust in government. However, anti-corruption efforts through education and agencies like the KPK have helped to reduce corruption levels in Indonesia in recent years.

1. Analyzing CaseAbout
Fiscal Policy
Name:
1.Jason Devin (2201730974)
2.Brilliant Ezekiel (2201733490)
3. Nadia Manalis (

2. What Is Fiscal
Policy
 Fiscal Policy is the means by which a government adjusts its
spending levels and tax rates to monitor and influence a nation's
economy.
 It is the sister strategy to monetary policy through which a central
bank influences a nation's money supply.
 Using a mix of monetary and fiscal policies, governments can control
economic phenomena

4. How it Works
 Fiscal policy is based on the theories of British
economist John M Keynes. Also known as Keynesian
Economics, this theory basically states that governments
can influence macroeconomic productivity levels by
increasing or decreasing tax levels and public spending.
This influence, in turn, curbs inflation (generally
considered to be healthy when between 2% and 3%),
increases employment, and maintains a healthy value of
money. Fiscal policy plays a very important role in
managing a country's economy. For example if an
economy has simultaneous increase in tax rates, and also
combined with cuts in government spending, it will
make the economy fall, so in order to avoid that the
government need to cut tax rates.

5. Objectives of
Fiscal Policy
1. Optimal allocation of economic resources. The aim is that fiscal policy is to
increase the efficiency of productive resources. To ensure this, the government
should spend on those public works which give the maximum employment.
2. Fiscal policy should aim at fair distribution of wealth and income. It means
that fiscal policy should be so designed as to bring about reasonable equality
of incomes among different groups by transferring wealth from the rich to the
poor.
3. Another objective of fiscal policy is to maintain price stability. Deflation leads
to a decline in business activities. On the other side, inflation may hit the fixed
income classes hard while benefiting speculators and traders. Fiscal policy has
to be such as will maintain a reasonably stable price level thereby benefiting all
sections of society.
4. The most important objective of fiscal policy is the achievement and
maintenance of full employment because through it most other objectives are
automatically achieved. Fiscal policy aimed at full employment envisages the
direction of tax structure, not with a view to raising revenue but with a view to
noticing the effects with specific kinds of taxes have on consumption, saving
and investment.

6. Fiscal policy
Instrument :
budget
1. Budget : The budget of a nation is a useful instrument to assess the fluctuations in an
economy. Budget are divided into 3 categories :
• Annual Balanced Budget = a combination between surplus budget and deficit budget. That
combines the concept of expenses greater than income and the concept of income greater than
the expenses.
• Cyclically Balanced Budget = budget implies budgetary surpluses in prosperous period and
employing the surplus revenue receipts for the retirement of public debt. During the period of
recession, deficit budgets are prepared in such a manner that the budget surpluses during the
earlier period of inflation are balanced with deficits.
• Fully managed compensatory budget = This policy implies a deliberate adjustment in
taxes, expenditures, revenues and public borrowings with the motto of achieving full
employment without inflation.

7. Fiscal policy
Instrument
• Functional funding : this policy focused on how budget adaptation by
measuring the cost or fund by the government until it doesn’t give any
effects on nations income. Functional funding have a purpose to absorb
many workers by opening new job fields.
• Expansive fiscal policy : a government policy that gave us a stimulus on
economy by making the nation’s expense greater than an income in a
certain time.This policy will be used on the time of recession.

8. Fiscal
policy
instrument
• Contractive fiscal policy = This policy is the opposite of expansive policy.
Where, in contractive policy they focuses on expenses. The contractive policy
focuses on the income of a nation should be greater than expenses. The purpose
is to develop infrastructure, investment and etc.
• Automatic Budget stability = Using the government expenses for something
useful with a minimum budget that can produce a lot of results.

9. Fiscal policy
Instrument
• Taxation is a powerful instrument of fiscal policy in the hands of public
authorities which greatly effect the changes in disposable income, consumption
and investment.
• public expenditure = public expenditure can had more direct effect upon the
level of economic activity than even taxes. As the public spending increased, it
will have a multiple effect upon income, output and employment exactly in the
same way as increased investment has its effect on them.

10. Indonesia
Fiscal
Expenditure

11. Gayus
Tambunan
Corruption
Case
The Gayus Tambunan Corruption case has shocked the
Indonesian Public and even embarrassed the President
and the Government alike. This is because how easily a
junior tax official to corrupt so much money and helped
a lot of high profile Businessman to evade taxes. Gayus
approximately caused the Government a loss of 1,52
Trillion Rupiah by helping 19 Companies to evade taxes.
Right now Gayus Tambunan is sentenced to 29 Years in
prison and is pronounced guilty for Corruption, Money
Laundering, and Tax embezzlement .

12. Detail on
Gayus Crimes
 The Jakarta Corruption Court sentenced Gayus to six years in prison and ordered him to pay Rp
1 billion (US$100,000) in fines or serve a further four months in jail.
He was found guilty of accepting Rp 925 million in bribes from tax consultant Robertus
Santonius to influence Gayus'€™assessment of a tax objection filed by PT Metropolitan Retailmart.
He was also found guilty of failing to report gratuities that he accepted in handling cases
involving the Corruption Eradication Commission (KPK), as well as violating the Money
Laundering Law, as he secreted a fortune with several financial service providers to avoid
arousing the suspicions of law-enforcement agencies.
Gayus opened several bank accounts and rented safety-deposit boxes under his own name, using
different identities and in his wife Milana Anggraeni”s name. The police found 31 gold bars in
one deposit box, which was registered to his wife.
The Jakarta High Court later increased his verdict to eight years in prison following the appeal.
In October 2011, Gayus was sentenced to two years in prison for passport forgery by the
Tangerang Court.
In July 2011, the South Jakarta Court sentenced him to 12 years in prison, for bribing judge
Muhtadi Asnun and police officer Comr. Arafat Enanie; conspiring with businessman Andi
Kosasih to draw up a fake agreement to unfreeze Gayus'€™Rp 28 billion bank account; and issuing
inaccurate judgments on tax objections filed by PT Surya Alam Tunggal.
Gayus was also sentenced to eight years imprisonment for tax embezzlement earlier in 2011.
So totally Gayus would have to serve the cumulative indictment of 30 years imprisonment,
because the lawsuits were tried in four different trials.

13. Government’s
loss because of
Gayus
 Indonesian Government loss adds up to total 1,52
Trillion Rupiah (Some source said even more). This
embarrassed Indonesian Government and President
Susilo Bambang Yudhoyono, who vows to decrease
corruption in the country when he got elected for the
second time in 2009. And this also makes the Indonesian
citizen wary of even paying taxes to the Government,
because of their money was actually used for personal
wealth of Gayus and his accomplices. On the other hand
many Overseas Investors hold their money because of a
lot of ongoing rumors and the political instability in the
Government, this makes for even more loss to the
Indonesian economy.

14. Corruption
Effects on
Economy
As corruption rises, there will be more and more losses on the
Economy, other than Gayus case, there is still many other corruption
case. Even Gayus himself said that he’s only an accomplice, and this
is only the tip of the iceberg. His statement means there are still a lot
of work to do to get rid of Corruption, and there are still many corrupt
officials in Indonesia, who had ties to Businessman or even high
Ranking Government Officials. Effects of Corruption on the
Economy Includes:
 Slowing the Economic Growth of a Country.
 Decrease in Investments.
 Increase in Poverty.
 Increase in income inequality.

15. Hambalang
Graft
• Corruption Eradication Commission (KPK) prosecutors said in their
indictment that recipients of embezzled funds included former Democratic
Party (PD) chairman Anas Urbaningrum and two close confidants of
President Susilo Bambang Yudhoyono '€”former youth and sports minister
Andi Mallarangeng and former head of the National Land Agency (BPN)
Joyo Winoto. Also implicated were member of the House of Representatives'€™
budgetary commission Olly Dondokambey of the Indonesian Democratic
Party of Struggle (PDI-P) and former chairman of House Commission X
overseeing sports Mahyuddin MS of the Golkar Party.
• The money also went to Andi's younger brother 'Andi 'Choel' Zulkarnain
Mallarangeng ' a number of officials at the Public Works Ministry and
executives from companies that won tenders for the construction project.
• In the indictment, Andi was accused of receiving kickbacks of Rp 4 billion
(US$352,000) and $550,000, while Anas was alleged to have gotten Rp 2.2
billion. Joyo was accused of taking in Rp 3 billion.
• The information was divulged in the indictment of Deddy Kusdinar, who was
the chief of financial and internal affairs at the Youth and Sports Ministry.
Deddy allegedly received Rp 1.25 billion.

16. Hambalang
graft
 During the initial stages of the project, Andi, who was once lauded as a rising star in the PD and had won the
reputation as Yudhoyono's golden boy, gathered executives from construction companies to design a master plan
for the project.
 Andi convened another meeting at his private residence, which was attended by Wafid Muharam, then a secretary
at the ministry, and the executives in question. Wafid has been accused of receiving Rp 6.5 billion in embezzled
funds.
 In the meeting, Wafid told Andi that the budget for the project could reach Rp 2.5 trillion and that it would be
difficult for the ministry to secure such a budget.
 In 2010, House Commission X approved the budget proposal without holding a proper meeting of the
commission and the ministry.
 In return for the favor, Wafid allegedly paid Rp 600 million to Mahyuddin during the PD'€™s congress in Bandung
in 2010.
 After securing the budget, Andi further rigged the project tender process. Gunning for state-owned construction
company PT Adhi Karya to win the contract, he held several more meetings, including with Adhi Karya director
Teuku Bagus Muhammad Noor. The company finally secured the project with the help of Choel, who demanded
a kickback of 18 percent from the project'€™s budget.
 After Adhi Karya won the tender, Andi received $550,000 from the company and an additional Rp 4 billion from
PT Global Daya Manunggal, one of the companies subcontracted by PT Adhi Karya.

17. Result of
Hambalang
cases
 When the project faced a problem securing the land permit necessary to start the construction,
Andi ordered Wafid to approach then PD treasurer Nazaruddin and Mindo Rosalina Manulang,
former director at Nazaruddin’s holding company, Permai Group.

18. Corruption
Affects on
Society
 A lot of Corruption cases will surely worsen the
Public Opinion on the Government, in Gayus case
this is surely can be seen throughout the society
because the case itself is really famous among the
population. And there is even an Overseas article
that described Indonesia as one of the most corrupt
Countries in Asia. Making the Indonesian
Government image worsen even to foreigners.
Another impact of Corruption is on Ethic and
Morality, because corruption is a crime of intent and
one of the causes is the lack of ethic and morality,
even more so than the lack of money itself.

19. Economic
Implications
 Corruption in Indonesia affects a lot of Country’s
reputation and has created obstacles to local and
foreign direct investment, flows to the stock market,
global competitiveness, economic growth and has
ultimately distorted the development and upliftment
of our people. Public money is for government services
and projects.Taxes collected, bonds issued, income
from government investments and other means of
financing government expenditure are meant for social
grants, education, hospitals, roads, the supply of power
and water and to ensure the personal security of our
citizens. Corruption and bad management practices eat
into the nation’s wealth, channeling money away from
such projects and the very people most dependent on
government for support.

20. Income
Inequality
 Because corruption creates fiscal distortions and redirects money
allocated to income grants, it is usually the poor who suffer most.
Income inequality has increased in most countries experiencing
high levels of corruption. Especially in developing Countries such
as Indonesia.

21. Ways to
Eradicate
Corruption
 Corruption is one of the most difficult crimes to
eradicate, and one of the ways to eradicate it is to
establish an Anti Corruption Agency (KPK) and
establishing corruption law. For global rank, Indonesia is
ranked 96th out of 180 countries in the world. Although
there is KPK, corruption laws in Indonesia are still weak
and sanctions given to corruptors are still less assertive.
In addition, law enforcement officers can still be bribed.
These what make corruption still exist in Indonesia.
 But one of the KPK main focus is in prevention, through
film, education, music, and many other unique methods
of preventions.

22. Prevention
through
Education
 KPK even considers that Anti-Corruption programs
should be included in the curriculum and become part of
the subjects at school, even as compulsory subjects at
universities. Starting from elementary school to college,
it became one of the KPK's focus in combating
corruption. Students are taught to think critically that
corruption is a crime. "By being invited to critical
thinking can be known to the deepest thoughts among
students, indirectly given the sense that if doing
corruption is a crime”. In addition, in the course it is also
taught about integrity, professionalism and morality.
However this is a long term program.

24. Executive
Summary
So, we learned from both of GayusTambunan corruption and
Hambalang Graft case that corruption affects our economy and
reputation badly.This 2 cases teaches us and the Government to be
more aware ofWhite collar crimes, because it has a lot of impact to the
economy and our society. But I personally think that Indonesia is doing a
good job in rapidly vanishing corruption, although it’s a long process, we
have seen improvements today compared to 9 years ago. KPK should
continue their work meanwhile also education young people about
corruption, that way corruption can be severely reduced in the
foreseeable future.

25. References
• https://www.thejakartapost.com/news/2013/11/08/money-binge-hambalang-
graft-case.html
• https://dosenekonomi.com/ilmu-ekonomi/moneter/kebijakan-fiskal
• http://www.economicsdiscussion.net/fiscal-policy/5-major-instruments-of-fiscal-
policy/4696
• https://www.investopedia.com/insights/what-is-fiscal-policy/
• https://tradingeconomics.com/indonesia/fiscal-expenditure
• https://www.indonesia-investments.com/business/business-columns/indonesia-
improves-in-corruption-perceptions-index-ranking-but-graft-cases-remain-
widespread/item9115