Opportunities and Challenges to Increase Tax Receipts

JAKARTA – The government is optimistic to raise additional tax revenues by 1.5% from administrative reforms, and 3.5% of policy remedies in the next 5 years.

Ramadhaniah, Kabsubdit Impact Policy Directorate General of Taxes, said the calculation was taken from the International Monetary Fund (IMF).

“[The prediction] is actually an encouragement for us [in implementing tax reform and policy reform],” he said in a seminar on Indonesia Economic Tax, in Jakarta, Thursday (15/3/2018).

It is said, his own party has a more detailed view in reaching it. There are opportunities and challenges faced by DGT this year in achieving all its acceptance targets.

The first opportunity, tax revenues in 2017 grew 15.85%, making it a strong base line for it targets a better tax revenue.

Second, the trend of tax revenue growth has rebounded from its lowest point in 2016.

Third, the growth of tax revenue in the dominant sectors such as manufacturing and trading industries respectively by 17.1% and 22.9%, well above the growth of other tax revenues.

Fourth, there is a trend of increasing compliance tax compliance ratio from 63.2% in 2016 to 72.6%. “This is the impact of the tax amnesty results yesterday,” he added.

Fifth, taxpayers’ satisfaction rate on DGT service performance increased from 4.10 in 2016 to 4.27% in 2017.

Sixth, there is the possibility of adding new WPs as the middle class rises from 29.7% of the total population in 2012 to 52.7% by 2020.

Seventh, it also comes with rules that make it more effective in raising the tax base. Like, PP 36 of 2017 on income tax, PMK No year 2017 and Law no 9 of 2017.

However, on the other hand he also realizes that many predicted challenges are rather difficult to achieve.

“It’s a challenge, if we talk about the challenge, it must make us spirit, how to improve the compliance that leads to acceptance,” he added.

The first challenge, the target of tax revenue in 2018 is quite large compared to its realization in 2017, ie 23.7%. Secondly, economic growth in 2018 is estimated to be unachievable from achievement in 2017 (5.07%), although the target is set at 5.4%.

Third, the growth of tax revenues of the dominant sector is significant, but GDP growth does not show such thing, namely the GDP growth of processing and trade industries is 4.2% and 4.8%.

Fourth, there is a shift in consumption patterns due to the increasingly dominant use of digital devices, which it is feared also affect the behavior of taxpayers.