JAKARTA: Indonesia failed to meet its tax revenue target in 2017, posting Rp 132.1 trillion around $9.5 billion in tax shortfall from the target set in last year’s revised budget, its Finance Ministry announced on Tuesday (02/01). Finance Minister Sri Mulyani Indrawati said the 2017 tax target was set too high, especially since the ministry had to spend most of last year updating taxpayers’s data. The government had expected to collect Rp 1,283.6 trillion from various taxes including income tax and value added tax in 2017. This figure excluded revenues from excise and import duty.
“If we flash back to 2014, 2015 and 2016, the tax revenue targets have always been set very high. This has created a huge gap [in the budget] that leads to various excesses, threatening the credibility of the budget itself,” the former World Bank managing director told reporters in a press conference on Tuesday. She said the government does not want to hassle taxpayers unnecessarily since many have complained they are being hounded to pay more taxes when the economy is under pressure. The shortfall meant the government collected only 89.7 percent of its original tax target. This is not unprecedented since Indonesia has actually failed to meet its tax revenue target each year since 2009.
The worst shortfall was in 2015 with the tax office only meeting 81.5 percent of its target Rp 1,055 trillion out of Rp 1,294.3 trillion.
The Indonesian economy has been slowing down in the past few years as global commodity prices continue to fall. This has led to slower export from the country a major global producer of palm oil, coal and tin. To improve tax revenue this year, the ministry will update its taxpayer data using information it collected during its tax amnesty program last year, which offered taxpayers penalty discounts for declaring their unreported assets. The tax amnesty program was created to expand they country’s tax base and help boost tax collection. Sri said the finance ministry’s tax directorate general will also make use of the Automatic Exchange of Information (AEoI), which will begin operating in September 2018, to expand the taxpayer database.
