JAKARTA: World Bank (WB) economist Ndiame Diop has said Indonesia’s tax revenue target of Rp 1,489.3 trillion (US$1.49 quadrillion) set by the government in the 2015 revised state budget (APBN-P) is unlikely to be achieved.
“This year’s tax revenue target is too ambitious because the prices of commodities are on the decline. Moreover, revenues from the oil and gas sector have also declined, affected by the global oil price movements,” he said as quoted by Antara in Jakarta on Wednesday.
Diop said Indonesia’s tax revenue targets had difficulty being achieved in the last several years due to a slowing economy and declines in the price of commodities in the world. This year, declining oil prices will also affect the country’s revenue targets.
“A shortfall is unavoidable. Moreover, in 2015, the sharp declines in oil prices could affect non-tax state revenue targets. The government must work harder,” he said.
The analyst further explained that various efforts, including revisions of several regulations to collect potential new taxes, conducted by the Taxation Directorate General, would not be optimal this year as their impact would be seen only in 2016.
He said if the realized revenue targets could not get closer to their potential, the government must adjust its spending so that the budget deficit could be still maintained at around 2 percent of GDP.
“Our projection is that the budget deficit might approach 2.5 percent of this year’s GDP,” said Diop.
Separately, Indonesian Chamber of Commerce and Industry (Kadin) chairman Suryo Bambang Sulistio said Kadin understood the government’s view that increases in tax revenue targets were needed for the supply of funds for infrastructure spending; however, the current situation was not conducive for such a policy.
“We can understand the government’s intention to increase tax revenues but the timing is not right. […] currently, businesspeople are facing difficult times due to crisis; how can we be pushed again with [heavier] tax targets? I think the government must reconsider this,” he said.
