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Tax revenue exceeds target for first time in 12 years
Recovering business activity, high commodity prices and a relatively low target helped tax revenue exceed expectations.
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Finance Minister Sri Mulyani Indrawati discusses the new Harmonized Tax Law (HPP) in a meeting of the public and business representatives in Nusa Dua, Bali, on Nov. 19. (Finance Ministry/Tax office's public relation)
T
he Finance Ministry has exceeded its yearly tax collection target for the first time in 12 years amid recovering business activity and high commodity prices, although the target is lower than in preceding years.
The ministry announced on Monday that tax collection had reached Rp 1.23 quadrillion (US$86.59 billion) as of Dec. 26, which is 0.2 percent higher than the full-year target of Rp 1.22 quadrillion set out in the 2021 state budget.
The collected taxes are also 21.7 percent higher than the Rp 1.01 quadrillion collected up to Dec. 23 last year, when collections declined due to a slump in import activities, lower global oil prices and weakening overall business performance blamed largely on the COVID-19 pandemic.
“This is a historic moment. In the midst of the pandemic, while the economic recovery is still in progress, we have been able to achieve the target before year-end,” said Finance Minister Sri Mulyani Indrawati during a national meeting in Jakarta on Monday.
The last time tax revenue exceeded the annual target was in 2008, when collections reached Rp 571 trillion or 106.7 percent of the target. Then, Sri Mulyani was also finance minister.
But the 2021 target was the lowest since 2014, when the target was set at 1.07 quadrillion, according to data compiled by the Center for Indonesia Taxation Analysis (CITA).
Read also: Sri Mulyani shows promise with her sunset policy record: Economists
Tax director general Suryo Utomo said the government aimed to continue raising tax revenue to be able to reinstate a budget deficit cap of 3 percent of gross domestic product (GDP) by 2023.
Law No. 2/2020 on state financial policy and system stability for COVID-19 handling only permits the government to exceed the budget deficit cap for three years.
“Challenges will be tougher going forward. 2022 will be the last year the state deficit is allowed to exceed 3 percent,” Suryo said in a statement.
Read also: Belt-tightening key theme of 2022 budget
Sri Mulyani in August told reporters that the state deficit would be no more than 4.85 percent in 2022, much lower than in both 2021 and 2020, when the deficits were 5.82 percent and 6.14 percent respectively. The 2022 deficit equals a gap of Rp 868 trillion between state revenue and state expenditure.
