Kontan Online

BUDGET CUTS

Cost cutting controlled budget deficit

Wednesday, 04 January 2017 | Adinda Ade Mustami, Asep Munazat Zatnika

JAKARTA. Government claimed to succeed to maintain the deficit of 2016 Revised State Budget to not exceed 2.5% of Gross Domestic Production (GDP). Temporary realization of 2016 Revised State Budget was Rp 307.67 trillion or 2.64% of GDP.

The number was not much different with the target of 2016 Revised State Budget that was Rp 296.7 trillion or 2.35% of GDP.
As is known, Minister of Finance Sri Mulyani has cut the expenditure budgets of ministries and government institutions by Rp 67 trillion. The policy aimed at anticipating of the tax revenues shortfalls, which amounted to Rp 219 trillion.

Sri said that the budget cut, which has been realized 100% by the ministries and state institutions, is the key to control the deficit. “In some institutions, such as Police, the realizations (of budget cut) were more than 100%,” Sri said, Tuesday (3/1).

According to Ministry of Finance, the realizations of ministries and government institutions’ expenditures amounted to Rp 677.6 trillion. The number was lower Rp 90.2 trillion of 2016 State Budget’s target. Minister of Finance claimed that the savings have allowed the government to disburse General Allocation Funds (DAU) to local governments.

Failed to achieve target
The realization of state revenues as of the end of 2016 amounted to Rp 1,551.7 trillion. The number consisted of tax revenues, non-taxation revenues, and grants as much as Rp 1,283.5 trillion, Rp 262.3 trillion, and Rp 5.8 trillion, respectively.

The tax revenues were lower than Rp 1,539.16 trillion of 2016 Revised State Budget’s target. The realization was also lower than government’s realistic projection of Rp 219 trillion shortfalls. In accordance with the projection, the realization of tax revenues was supposed to be Rp 1,320 trillion.

The tax revenues as of the end of 2016 consisted of oil and gas income tax as much as Rp 35.9 trillion, or 98.8% of the target of 2016 Revised State Budget. The tax revenues also consisted of income tax from non-oil and gas sector as much as Rp 1,069 trillion or 81.1% of 2016 Revised State Budget’s target. Another component, namely customs and excise revenues contributed Rp 178.7 trillion, or 97.2% of 2016 Revised State Budget’s target.

Several factors have caused the tax revenues to fail to meet 2016 Revised State Budget’s targets, such as the shortfalls in tax amnesty revenues. As of the end of 2016, the state revenues from tax amnesty was Rp 107 trillion, or lower the target of Rp 165 trillion.

Aside of the shortfalls in tax amnesty revenues, the increase in the limit of non-taxable income from Rp 3 million to Rp 4.5 million had also caused that target can not be met . “This policy has reduced the revenues by Rp 20 trillion,” Sri said.

Executive Director of Center for Indonesia Taxation Analysis (CITA) Yustinus Prastowo expects, the government can have maximum benefits of tax amnesty moment. The additional tax data will be an instrument for government to boost state revenues in 2017. (Muhammad Farid/Translator)

Reporter: Adinda Ade Mustami, Asep Munazat Zatnika
Editor: Sanny Cicilia
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