Sri Mulyani concerns over low tax-to-GDP ratio

Finance Minister Sri Mulyani Indrawati has expressed concern over the country’s low tax-to-gross domestic product (GDP) ratio.

At 10.3 percent, it is an indication that the tax received by the government is far lower than the potential.

“As a former World Bank official, I see the figure as very low,” Sri said when speaking at an international tax conference in Jakarta as reported by kompas.com on Thursday.

She said the government had tried to increase the tax-to-GDP ratio after organizing the nine-month tax amnesty that ended in March.

Further efforts include making financial information more transparent by joining the Automatic Exchange of Information (AEoI) and cooperating with other countries, including members of G20, to fight tax evasion by multi-national companies and rich people.

“Since the 2008-2009 financial crisis, finance ministries across the globe have experienced the same things. Therefore, we have to jointly put pressure on tax evaders,” she said, adding that the government had set a target tax-to-GDP ratio of 16 percent by 2019.

International Monetary Fund (IMF) deputy managing director Mitsuhiro Furusawa agreed with Sri Mulyani, stressing that Indonesia needed to increase its tax-to-GDP ratio.

“I think it is an ambitious target, but it can be achieved. The most important thing is political will,” Mitsuhiro said. (bbn)