Revised State Budget, Tax Target Shrinks to IDR388 trillion
Tuesday, 07 April 2020
JAKARTA. The Government formally changed the posture of the 2020 APBN by issuing Presidential Regulation (Peraturan Presiden/Perpres) number 54 of 2020, concerning Revision of Posture and Details of the State Budget (Anggaran Pendapatan dan Belanja Negara/APBN) for the 2020 Budget Year, which came into force as from 3 April, 2020. The mechanism for revising the State Budget by issuing Perpres is unusual.
Usually, the amendment of the the State Budget is carried out by submitting the draft amendment of State Budget law to the People's Representative Council (Dewan Perwakilan Rakyat/DPR), which is then discussed through the Working Committee in the House of Budget Commitee (Badan Anggaran/Banggar) and related Commission, for approximately three months. However, this unusual process must be carried out because the normal revision process of the State Budget is difficult to do.
This change is a follow up of a number of government policies in mitigating the impact of the spread of the Corona Virus Disease 2019 (Covid-19), as stated in Government Regulation in Lieu of Law (Peraturan Pemerintah Pengganti Undang-Undang/Perppu) number 1 of 2020.
Read: Responding Corona, Tax Stimulus Package is Officially Valid
In the revised state budget, the current state revenue target is set at IDR 1,760.9 trillion, down to 21.1% from the 2020 state budget target of IDR 2,233.2 trillion.This includes the target of tax revenues shrinking 21.6% to IDR 1,254.1 trillion or trimmed as much as IDR 388.5 trillion. While the target of customs and excise revenue and non-tax revenue (Penerimaan Negara Bukan Pajak/PNBP) each dropped to IDR 14.6 trillion and IDR 69.2 trillion.
Tax Ratio Decreased
Related to the change of state revenue target, the tax ratio or tax to GDP ratio is estimated to only be 9.14%, lower than the tax ratio target in the 2020 State Budget of 11.56%.The low state revenue is due to various factors, one of which is the tax incentive given in the context of economic stability during the Covid-19 period.
Meanwhile, on the expenditure side there is an increase of IDR 73.4 trillion due to the reallocation and additional expenditure budget for handling Covid-19 amounting to IDR 255.1 trillion. The budget of the central Government, consisting of the expenditure of Ministries/Institutes (Kementerian/Lembaga/K/L) and non K/L are experiencing trimming of IDR 87.5 trillion. While the budget for transfer to regions and village fund are cut at IDR 94.2 trillion.
With these changes in posture, the 2020 state budget deficit is likely to widen to 5.07% from the original target of only 1.76%.This widening deficit also exceeds the maximum deficit limit that has been maintained, which is 3%.
| Types of Taxes | APBN (IDR Trillion) | Revised APBN (IDR Trillion) | Difference (IDR Trillion) | % of GDP |
| Oil and Gas Income Tax | 57,4 | 43,7 | (13,7) | 76,2 |
| Non Oil and Gas Revenue Tax | 1.585,1 | 1.210,1 | (374,8) | 76,4 |
| - Non Oil and Gas Income Tax | 872,5 | 659,6 | (212,9) | 75,6 |
| - VAT | 685,9 | 529,7 | (156,2) | 77,2 |
| - Land and Building Tax | 18,9 | 13,4 | (5,4) | 71,3 |
| - Other Taxes | 7,9 | 7,7 | (0,3) | 96,7 |
| Tax Revenue | 1.642,6 | 1.254,1 | (388,5) | 96,7 |
Source : Ministry of Finance
