JAKARTA: Indonesia’s tax revenue in 2014 reached just over IDR1.14 trillion (USD90bn), only 91.7 percent of its annual budget of almost IDR1.25 trillion, Indonesia Finance Minister Bambang Brodojonegoro revealed here the other day.
He said that tax revenue collections last year were affected by the economic slowdown in the manufacturing sector and the mining sector, weakening imports, and a decrease in the price of crude palm oil on the international market.
However, as a result of government spending also being lower than budgeted, the Government’s fiscal deficit reached only IDR227.4 trillion last year, or 2.26 percent of the country’s gross domestic product (GDP). The 2014 Budget had foreseen a deficit of 2.4 percent of GDP.
The new Indonesian Government is expected to produce a revised 2015 Budget within the next few days. However, with the continued decline in oil prices and continued global economic uncertainty, Brodojonegoro has already said that the Government will focus on improving tax compliance rates, so as to raise Indonesia’s relatively low tax-to-GDP ratio and find the extra revenue to pursue its infrastructure and welfare spending policies.
It has been indicated that the Directorate General of Taxation will look to broaden the country’s tax base, by collating extra data on current and prospective personal and corporate taxpayers, and by reviewing current tax holidays and tax incentives available for manufacturers, that could now be considered unnecessary.
