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Until August, Tax Revenues Contracted 15.6%

Wednesday, 23 September 2020

Until August, Tax Revenues Contracted 15.6%

JAKARTA. The tax revenue realization until the end of August 2020 experienced another contraction. Based on data released by the Ministry of Finance, tax revenue as of 31 August, 2020 was recorded at IDR 679.9 trillion, or contracted by 15.6% compared to the same period in 2019.

The contraction occurred in August was the deepest in the January-August 2020 span. It was triggered by the negative growth in the performance of various types of tax revenue, especially those that make the largest contribution, such as Non-Oil and Gas Income Tax (PPh nonmigas) and Value Added Tax (VAT) which grew -15.2% and -11.6% respectively.

Likewise, Oil and Gas Income Tax (PPh migas, which last year recorded positive growth, this time it was corrected by 45.2% or only IDR.67.8 trillion collected.  Meanwhile, the realization of Land and Building Tax (PBB) and other taxes was recorded at IDR 9.7 trillion and 4.0 trillion, respectively.

Not As Expected

Minister of Finance Sri Mulyani said this tax revenue realization did not meet the government's expectations.  Especially the non-oil and gas income tax performance, which is expected to depreciate no more than 10%, the realization has actually contracted to 15.2%.

According to her, the decline in tax revenue performance is inseparable from the economic slowdown that occurred in the third quarter. In addition, various tax incentives provided by the government to taxpayers affected by Corona Virus Disease 2019 (Covid-19) also suppressed the revenue.

It can be seen from the realization of Corporate Income Tax (CIT) revenue that grew -27.52% compared to the same period in 2019. Meanwhile, individual income tax revenue were recorded to still show positive growth, although lower than August 2019 growth.

Weakening economic activities can be seen from the corrected realization of tax revenues from various economic sectors. The highest correction occurred in revenues from the mining sector at 35.7%, then trade -16.3%, manufacturing 16%, construction and real estate -15.1% and warehousing transportation -10.4%

The Deficit Reaches 3% of GDP

The pressure that occurs on the revenue side has an impact on the overall posture of the State Budget (APBN).  This can be seen from the state budget deficit that occurred in August 2020, which had already touched the level of 3.05%.

If under normal condition, a deficit of more than 3% indicates dangerous state budget conditions because it exceeds the limit of deficit tolerance allowed by regulation. However, as stated in Presidential Regulation (Perpres) No. 72 of 2020, which is also the basis for the posture change in the 2020 State Budget, the government increased the deficit tolerance limit to 6.34%.

The deficit in August occurred because on the state revenue side, it was only able to collect IDR 1,034.1 trillion, or 60.8% of the revenue target in the 2020 Revised State Budget (APBN Perubahan). Meanwhile, on the state expenditure side that had been realized, it amounted to IDR 1,534.7 trillion.

 
 



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