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Ganjar-Mahfud to refrain from tax hike if elected
Indonesia’s tax ratio currently stands at around 10.5 percent and covers 82 percent of state expenditure, vice presidential candidate Mahfud MD noted, underscoring the need for greater tax returns.
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Vice presidential candidate Mahfud MD speaks during the second 2024 election debate at Jakarta Convention Center on Dec. 22, 2023. The debate covered issues related to the economy, finance, tax, investment, trade and infrastructure. (Antara/Akbar Nugroho Gumay)
Vice presidential candidate Mahfud MD has said that he and his running mate Ganjar Pranowo will not raise taxes as a means of managing state debt if they win the election next week.
The campaign promise was made by the constitutional law professor at one of his camp’s “Tabrak, Prof!” (Break through, Professor!) events in Jakarta on Wednesday.
“If I’m asked whether a Ganjar-Mahfud administration would raise taxes to eliminate [state] debt, our answer is no because it would be a burden on the people,” Mahfud said, as quoted by state news agency Antara.
Instead, the former coordinating minister for politics, legal and security affairs suggested that their government would seek to eliminate corruption in taxation, as well as to raise the tax ratio, which he defined as the state’s capacity to “collect from taxpayers who have yet to be reached”.
Indonesia’s tax ratio currently stands at around 10.5 percent and covers 82 percent of state expenditure, Mahfud noted, underscoring the need for greater tax returns.
“If our tax ratio gets to the level of Malaysia or Thailand, which is just 14-15 percent, then all of our state budget needs can be covered by taxes, and then some,” he said.
Just months ahead of tax season, taxation has become a recent point of contention, especially among candidates in the 2024 general election.
According to Finance Ministry figures as of January 2023, the state has amassed Rp 8.14 quadrillion (US$52 billion) in debt, nearly 40 percent of the gross domestic product. Last year, tax returns reached Rp 2.15 quadrillion, with the tax-to-spending ratio hovering at 10.21 percent.
