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Want Indonesia Debt Free? Here’s how!

Jakarta – Tax reforms that impact on an increase in tax payments can be a solution to government debt issues. Therefore, the revision of the tax law should be resolved immediately.

Tax observers from Danny Darussalam Tax Center (DDTC) Darussalam said Indonesia’s fiscal risks stem from the revenue sector, mainly from taxes as the largest contributor.

“It means that successful tax collection and achieving the target will reduce the fiscal risk because it also reduces the need for debt, therefore, the increase in tax ratio becomes a necessity,” he told on Monday (19/3/2018).

He explained that the IMF calculates that a country at least requires a minimum tax ratio of 12.75% to ensure sustainable growth, so that the country can have funds that do not come from debt to fund its development.

Meanwhile, based on the Ministry of Finance’s report, the tax ratio of non-tax ratio in 2012 (9.14%), 2013 (9.16%), 2014 (8.89%), 2015 (8.7%), 2016 (8, 6%), and 2017 (8.1%).

On the other hand, Darussalam said, the true fiscal risk not only arises from the weakness of the receiving side, but the risks can also arise from the spending side.

“The government also needs to make the shopping side to be more rational,” he added.

That is, spending is allocated more to sectors that have large multiplier impacts, drive demand-side, and are efficient.

However, he said, of the two options, the most appropriate thing is the increase in tax revenue.

“So I always deliver the package of tax laws should be immediately prosecuted as a tax revenue capital that ensures sustainable development,” he concluded.

What do you think?

Written by DI

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