Tax target should be evaluated

JAKARTA. Apparently, Minister of Finance Sri Mulyani needs to evaluate the target of tax revenues in 2017, on the grounds that the realization of tax revenues in 2016 had missed the target of 2016 State Budget.

As of 31 December 2016, the realization of value-added tax (VAT) revenues was Rp 410.5 trillion, or only 86.6% of the target of 2016 Revised State Budget. This number was the lowest during the last four years. The realization of VAT revenues in 2016 has dropped by 3.12% compared with 2015.

As of the end of 2016, the realization of income tax revenues from non-oil and gas sector was Rp 630.9 trillion. The realization was 5.7% higher than 2015. However, this number includes the tax amnesty revenues. Without tax amnesty revenues as much as Rp 107 trillion, the realization of income tax revenues from non-oil and gas sector has dropped by 4.9% from 2015. According to government, the VAT tax revenues failed to meet the target due to high restitution.

However, at a certain level, the decrease in income tax and VAT revenues actually can confirm the economic slowdown. This situation has deteriorated the business condition.
The sluggish performance of export and manufacture industry also indicate the economic slowdown. Even, the manufacture industry growth had decreased since 2014.

Therefore, Minister of Finance is planning to conduct evaluation. “We have to be alert of macroeconomic assumption, due to the changes in some external factors,” she said, Tuesday (3/1). 2017 State Budget sets the target of taxation revenues as much as Rp 1,307.3 trillion. The target is 18.3% higher than the realization of tax revenues in 2016 that amounted to Rp 1,104.9 trillion.

That target is higher than the target of 2017 economic growth. With the target of 2017 economic growth at 5.1% and inflation rate at 4%, the natural growth of tax revenues is supposed to be only 9.1%.

Managing Partner of DDTC Darussalam predicts, the tax revenues will only grow by 10.9% to Rp 1,226 trillion in 2017. The projection has included the economic slowdown, inflation rate, and the impact of tax amnesty.

Executive Director for Indonesia Taxation Analysis Yustinus Prastowo expects, the economic improvement will increase tax revenues.

However, the government has to set a more realistic target of tax revenues. Therefore, the entrepreneurs can ‘restart their engines’, not only be subject to tax. (Muhammad Farid/translator)