Government to revise down tax revenue target

Coordinating Economic Minister Darmin Nasution says the government will propose to revise down its tax revenue target for the 2017 state budget to Rp 1.45 quadrillion (US$108.35 billion) from nearly Rp 1.5 quadrillion.

The revision will be made to maintain the credibility of the state budget and make it more realistic after the government collected just Rp 571.9 trillion, or about 38.2 percent of the full-year target, during the first half of 2017. 

“The government doesn’t want to see a bad assessment from the global market,” the minister said as reported by kompas.com on Tuesday, (11/7).

He spoke these words at a hearing with House of Representatives Commission XI, which oversees financial issues.

“Imagine if we do not cut the target by Rp 50 trillion. Investors can calculate [that we will miss the target]. The impact will be worse if we do not make a correction,” Darmin added.

Standard & Poor’s in May upgraded Indonesia’s sovereign credit rating to investment grade (BBB-) from the previous junk status, a response to Indonesia’s strong fiscal management. The agency’s move followed similar upgrades announced by Fitch in late 2011 and Moody’s in early 2012.

Commission XI member MIsbakhun has questioned the government’s move given that the government has revised its growth target upward to 5.2 percent from 5.1 percent this year.

“If the government increases the growth assumption, the tax revenue target should be higher,” he added. (bbn)