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Commodity downturn to eat into state revenue, Finance Ministry says
Lower world commodity prices will impact state revenue this year, the Finance Ministry has said, as the sector accounts for a significant portion of the government’s tax and nontax income.
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Finance Minister Sri Mulyani gives a statement concerning the judicial review of Law No. 11/2016 on tax amnesty at the Constitutional Court in Jakarta on Sept. 20, 2016. (JP/Dhoni Setiawan)
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ower world commodity prices will impact state revenue this year, the Finance Ministry has said, as the sector accounts for a significant portion of the government’s tax and nontax income.
The ministry’s taxation director general, Suryo Utomo, said on Monday that the impact would likely be felt in corporate income tax, as firms in the commodities sector would pay less to the state. He added that the government had taken this into account in its revenue projections for the year.
According to ministry data, corporate income tax typically accounts for 28.7 percent of state tax revenue.
“The moderation of commodity prices is inevitable. […] We will monitor commodity prices, as they will impact income tax,” Suryo told reporters at a media briefing on the state budget.
Thanks in large part to high commodity prices, annual state revenue jumped by more than 30 percent last year, to Rp 2.62 quadrillion.
The windfall allowed the government to spend more on fuel subsidies to contain inflation, among other initiatives. It also saved some of the funds to be used this year.
Experts have previously warned that lower commodity prices will affect state revenue this year and have urged the government to limit unnecessary spending.
