The government has set a tax revenue target for next year that is 14 percent higher than this year’s estimated tax revenue. This target is considered to be more realistic and achievable.
The government set a tax revenue target of IDR 1,304.7 trillion in the 2017 state budget, which is four percent lower than the revised 2016 state budget of IDR 1,355.2 trillion. (Read: Individuals Contribute Most from Tax Amnesty)
However, Finance Minister Sri Mulyani previously estimated that the government’s tax revenue would amount to some IDR 1,136.2 trillion by the end of this year. This means the government would suffer from a tax shortfall of 16 percent or IDR 219 trillion. That would mean next year’s tax revenue target would be 14 percent more, or IDR 168.5 trillion, than this year’s estimated actual tax revenue.
Coordinating Minister for Economic Affairs Darmin Nasution is optimistic that the government will be able to achieve 2017’s tax revenue target because natural tax revenue growth should be 9.3 percent. This calculation was based on an accumulation of natural tax revenue growth, assuming economic growth of 5.3 percent and inflation of 4 percent next year.
The Directorate General of Taxation has also made extra efforts to increase the government’s tax revenue growth by some 5 percent in order for the government to be able to achieve a 14 percent tax revenue increase. “The difference is 4-5 percent (over and above natural growth). That’s the extra effort made by tax officials,” Darmin said on Tuesday (16/8).
One of these extra efforts includes additional tax revenue during the last quarter of this year from the tax amnesty program. As previously reported, the tax amnesty program will be in effect from 18 July 2016 until 31 March 2017.
President Director of the Center for Indonesia Taxation Analysis (CITA) Yustinus Prastowo said it would be more realistic to increase next year’s tax revenue target by 14 percent. He compared it to this year’s target, which was increased by 29 percent from to last year’s target.
This 14 percent tax revenue increase would also leave room for the private sector to expand their businesses. Therefore, investments would increase and support economic growth, which has been targeted at 5.3 percent in 2017. Meanwhile, the Directorate General of Taxation would be able to focus more on improving the medium-term and long-term system.
Prastowo is also certain that extra efforts will successfully support a five percent tax revenue increase considering the tax basis should increase after the implementation of the tax amnesty program. “This five percent extra effort is still OK, given there’ll be an increase in payments after tax amnesty,” he told Katadata on Thursday (18/8).
Meanwhile, Sri Mulyani said there will be no new strategies applied next year to encourage tax revenue growth. She said this year’s tax revenue officials have already been able to achieve the tax revenue target aside from the tax amnesty program. The government targeted additional tax revenue of IDR 165 trillion from the tax amnesty program.
Sri said she continues to monitor tax payments from the tax amnesty program each week. She will continue to closely monitor the implementation of the tax amnesty program until September this year as a basis for determining her next policy. (Read: BI: Tax Amnesty to Drive Economic Growth to 5.3 Percent)
“In case there are any permanent or technical obstacles, such as lack of information, approach or access. If there is a fundamental structural obstacle that causes us to revise our target, we will launch a fundamental policy,” she said. Sri assured the public that the policies she will launch would not have an impact on economic growth or market trust.