Page 12 - Working Paper (Tax Policy Options during Economic Downturn)

DDTC Working Paper 1315
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Table 4 - Tax Revenue for and in 2016 will stand at IDR 1,457 trillion or 95
2016 National Budget (IDR Trillion) percent to the draft 2016 Tax Revenue Budget. The
government seems very ambitious in setting its
No Description RAPBN 2016 target where it sets a 14.5 percent increases to the

I Tax Revenue 1.565 projected 2015 tax revenue realization.
A Domestic Taxes 1.524 The government takes several things into
1) Income Tax 763 consideration in setting up the target such as better
2) VAT 573.6 external and domestic economy conditions in
3) Property Tax 19.4 2016; implementation of the new tax regulations;
as well as tax administration and organization
4) Excise Tax 155.5
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improvement . In order to accomplish the target,
5) Other Taxes 11.8 the government focuses on four strategies such
B International Trade Taxes 41.7 as (see Table 5). These four strategies are mostly
1) Import Tax 39.2 a continuation from the previous determined
2) Export Tax 2.89 planned.
Source: Nota RAPBN, 2016 Given uncertain external environment, the
scope and options to domestic economy policies
remains limited. The scope of fiscal stimulus and
property tax has been diminishing from 1.9 to 1.3 monetary policy are constrained due to sticky
percent because of the central government’s policy inflation, weakening exports and purchasing
to relinquishing its authority to collect property tax power; as well as external vulnerabilities. Support
to local government. Tax revenue target in 2016 is from the expenditure side to the economy is still
14.8 percent higher than 2015 Budget. The number very low as a results of prolong procurement
increases around 3 percent from the previous process in the most of line ministries leading to
Revised 2015 National Budget. As mentioned, next delays in disbursement. Capital expenditure at the
year tax revenue realization will be a big challenge local government level is also not performing well.
to the government. Instead of putting in the productive sectors, local
governments deposit their money in banks or buy
Revenues from all major tax categories up central government bonds. On the revenue side,
to the middle of 2015 was contracted, with the the government has already introduced important
exception of non-oil and gas income taxes. The measures, such as electronic tax return submission
World Bank forecasted that tax revenue will only and improvements in the income tax audit strategy.
reach at around IDR 1,165 trillion or 78 percent
of the revised budget. DDTC also predicted at the
beginning of this year that tax revenue in 2015
29. Time-consistency policies are important in this matter as public will
will be at around IDR 1,288 trillion or 86 percent judge government’s performance according to this.

Figure 4 - Percentage of Tax Domestic Revenue, 2015-2016

60

50

40
30

20

10
0
Income tax VAT Property tax Excies Other taxes

2015 APBNP 2015 RAPBN
Source: Ministry of Finance, 2015