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Jakarta Post

Tax shortfall likely to be worse than expected: Sri Mulyani

  • Adrian Wail Akhlas

    The Jakarta Post

Jakarta   /   Wed, September 2, 2020   /   04:55 pm
Tax shortfall likely to be worse than expected: Sri Mulyani Finance Minister Sri Mulyani Indrawati attends a meeting with House of Representatives Commission XI on June 22. (Antara/Puspa Perwitasari)

The government will probably fail to meet its tax collection target, because economic activity slowed more than expected amid the coronavirus pandemic, Finance Minister Sri Mulyani Indrawati says.

Sri Mulyani said Wednesday that the government expected a greater tax shortfall this year following a change in its economic growth estimate.

“We expect a slightly lower tax income than the target set in [Presidential Regulation (Perpres) No. 72/2020] due to the possibility of lower economic growth in 2020,” she said. The shortfall would create a “more challenging environment” to increase tax revenue next year, Sri Mulyani added.

The government has revised its GDP target for the full year to growth of only 0.2 percent at best or a contraction of 1.1 percent at worst, down from a previous estimate of 1 percent growth or a 0.4 percent contraction.

The government previously expected tax income to reach Rp 1.19 quadrillion this year, around 10 percent lower than stated in the initial 2020 state budget assumption, as the coronavirus pandemic hit economic activity hard.

The government collected Rp 601.9 trillion in taxes in the first half, down 14.7 percent year-on-year and around 50 percent of this year’s target.