Govt aims to collect more tax without hiking rates
The 2027 budget plan passed last week foresees the highest tax revenue relative to gross domestic product in the past decade, which the government aims to achieve without introducing new levies or hiking rates.
The Indonesian government has set its sights on boosting tax revenue without implementing new taxes or raising existing rates. According to a new budget proposal for 2027, the government aims to achieve a tax revenue ratio of 9.26 percent of GDP - the highest level in the past decade. This projection represents a 12.2 percent increase from the current forecast, which stands at 8.96 percent for this year.
Tax Director General Bimo Wijayanto revealed that the government aims to raise this ratio to 9.26 percent of GDP this year, a figure that has not exceeded 9 percent in the past decade. The government's strategy to achieve this goal hinges on improving the taxation registry to capture a broader tax base. No plans for rate hikes or new taxes have been announced, emphasizing the government's commitment to raising revenue through enhanced tax collection methods.
The budget also forecasts a 12.2 percent year-on-year increase in tax revenue, reaching Rp 2.6 quadrillion (US$145 billion) next year, compared to the current forecast of Rp 2.31 quadrillion. While the figures pertain to tax revenue in a narrow sense, the Finance Ministry has yet to disclose its broader target for the tax-to-GDP ratio, which would encompass customs and excise revenue as well.
Currently, Indonesia's tax-to-GDP ratio stands at 9.32 percent for the first half of the year. This figure falls short of the 13-14 percent target President Prabowo Subianto had pledged during his election campaign in late 2023 and early 2024.
Written by urgent.news from The Jakarta Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
