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Jakarta Post

This year'€™s budget deficit to widen on tax shortfall

  • Tassia Sipahutar

    The Jakarta Post

Jakarta   /   Sat, November 7, 2015   /  05:10 pm

The government is expecting a bigger budget deficit than previously forecast this year as tax revenues have fallen well below target.

According to Tax Office head Sigit Priadi Pramudito, the tax revenue shortfall will amount to Rp 160 trillion (US$11.81 billion) in 2015, higher than the previous estimate of Rp 150 trillion.

He attributed the expanding shortfall to a slowdown in the economy and the weaker rupiah that put pressure on imports and therefore squeezed value-added tax (PPN) from imports.

'€œThere is also a shortfall in PPh [income tax] in the oil and gas sector. This year'€™s target was deliberately set lower because we had predicted earlier that we would see a decline in the oil and gas sector,'€ he said in a press conference.

Data from the Tax Office shows that as of Nov. 4, tax revenues, including oil and gas income tax, stood at Rp 774.48 trillion.

The figure is only 59.8 percent of the total target of Rp 1.29 quadrillion and is slightly lower (0.2 percent) than the same period in 2014.

The data also reveals that import PPN amounted to Rp 109.27 trillion, equal to 52.7 percent of the target and was down 12.6 percent from a year ago.

Meanwhile, oil and gas PPh reached Rp 43.76 trillion, making up 88.3 percent of this year'€™s target, but down 41.3 percent from Nov. 4, 2014.

Sigit said the Tax Office would work on the asset revaluation program and other schemes to secure at least an additional Rp 300 trillion in tax income within the two remaining months.

The additional income will bring total tax revenues in 2015 to at least Rp 1.07 quadrillion, or equal to 83 percent of the expected target.

Sigit said the Tax Office had not set a specific target for the asset revaluation program, but claimed that several firms had expressed their intentions to apply for it.

Meanwhile, the deepening tax revenue shortfall will impact overall state revenues and the budget deficit outlook in 2015.

The government had initially set the deficit outlook at 1.95 percent '€” or Rp 222.5 trillion '€” of gross domestic product (GDP) this year, but revised it to 2.23 percent of GDP.

However, with the latest data from the Tax Office, the deficit is now expected to widen again.

Robert Pakpahan, director general at the Finance Ministry'€™s financing and risk management office (DJPPR), said he had been assigned to look for financing to plug a deficit of '€œ2.59 percent of the GDP'€.

At such a rate, the deficit is estimated to reach Rp 303 trillion by the end of the year, assuming that GDP stands at Rp 11.71 quadrillion, as stated in the 2015 revised state budget.

Robert said the DJPPR had begun seeking extra financing, including by securing multilateral loans from multiple institutions.

The DJPPR, as reported before, has drawn up plans to raise an extra $5 billion to cover the deficit.

Separately, Bank Central Asia chief economist David Sumual said the latest deficit estimate was in line with his own forecast of 2.6 percent.

'€œThe government can choose several options to prevent the deficit from deteriorating, including by putting several spending plans on hold and optimally implementing the asset revaluation program.'€


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