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First half tax revenues fall below annual target
The governmentâs tax revenues slumped to a four-year low in the January to June period of 2015, falling short of the first-half target of this yearâs annual tax-collection target due to the ongoing economic slowdown
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The government's tax revenues slumped to a four-year low in the January to June period of 2015, falling short of the first-half target of this year's annual tax-collection target due to the ongoing economic slowdown.
The Finance Ministry's tax office recently revealed that tax revenue in the first six months of this year was forecast to amount to Rp 555.2 trillion (US$41.5 billion) or only 37.3 percent of the targeted Rp 1.49 quadrillion by the end of the year.
The amount of tax collected in the first six months of the year is the lowest level achieved during the same period in any of the last four years, which usually hit between 42 percent and 44 percent of their respective annual targets.
'The economic slowdown in the first quarter, declining imports and low commodity prices have been contributory factors to the lower-than-expected tax income in the first half,' the tax office explained in a statement.
Revenue from the property tax (PBB) slumped by 33 percent and income from export taxes plunged by 72.5 percent as of June year-on-year (yoy).
Income from import tax also decreased by 1.9 percent yoy in the first half of this year, in line with the economic slowdown as well as declining imports due to the rupiah's depreciation against US dollar and other foreign currencies.
The tax office had earlier predicted that it could collect only around Rp 1.37 quadrillion in tax income by year-end or 91.8 percent of the actual target of Rp 1.49 quadrillion.
Voicing a gloomier outlook, Samuel Sekuritas economist Lana Soelistianingsih said that the government would probably achieve only around 87 percent of the actual tax income target as the economic conditions had not shown any signs of a quick recovery.
'There's a very limited time to achieve the full target, but at the least, people's purchasing power has to be maintained, as tax from trade activities remains the largest contributor of tax revenue,' she told The Jakarta Post.
Lana added that the government, for example, should hold back on its plan to raise fuel prices in August so that consumer purchasing power stayed at the current level.
Andreas Eddy Susetyo, a member of the House of Representatives' Commission XI ' overseeing finance, said that the tax office should put extra efforts into achieving at least the 91.8 percent target.
The office has carried out renewed efforts to raise as much tax as is liable, demanding registered tax payers fulfill their obligations and ensuring that those eligible to be taxed do pay their taxes.
'By doing so, we expect that the state budget deficit will not be higher than the Finance Ministry's recent estimates of around 2.2 to 2.3 percent,' he said.
In its March quarterly report, the World Bank predicted a Rp 282 trillion shortfall in state revenues due to unrealistic tax targets that could swell the nation's budget deficit to 2.4 percent, from 1.9 percent in the official revised 2015 budget.
According to the tax office's projection, the nation's budget deficit reached 0.66 percent in the first six months of this year, a surge from 0.46 percent during the same period last year.
