Bumpy road to achieving higher tax ratio

Glenn Polii
Staff member at the Directorate General of Taxation at the Finance Ministry

PREMIUM

Jakarta / Tue, January 30, 2018 / 10:42 am

Bumpy road to achieving higher tax ratio

The Directorate General of Taxation (DGT) has released its latest report for 2017 fiscal year, showing a meager 4-percent growth in tax collection over the previous year. (Shutterstock/File)

The Directorate General of Taxation (DGT) has released its latest report for 2017 fiscal year, showing a meager 4-percent growth in tax collection over the previous year. If the tax amnesty program, which pertains to pre-2016 taxes and other nonrecurring revenues, were excluded, the growth figure shoots to 16 percent. Considering that the nominal growth of the economy in 2017 was only around 9 percent, the normalized revenue growth rate is not too bad. However, what really matters for the development effort is not the growth in revenue but the level of collection, and on this count the revenue performance was surely not a cause for a celebration. The revenue mobilization effort, spearheaded by the DGT, could only collect Rp 1.15 quadrillion (US$85 billion), or merely 8.5 percent of gross domestic product (GDP). If we include revenue from excise and other sources to this calculat...