The 2024 State Budget Draft Starts to Be Drafted, Taxation to Grow 12%-12.6% From the 2023 Target

Friday, 07 April 2023

The 2024 State Budget Draft Starts to Be Drafted, Taxation to Grow 12%-12.6% From the 2023 Target

JAKARTA. The government targets tax revenues in 2024 to increase by 12%-12.6% from the 2023 State Budget target. This is stated in the 2024 Macroeconomic Framework and Principles of Fiscal Policy (KEM-PPKF), as the basis for preparing the 2024 State Budget Draft (RAPBN 2024).

Quoting, nominally the 2024 tax revenue target is pegged at IDR 2,247.3 trillion to IDR 2,335.1 trillion. While the tax revenue target in 2023 amounted to IDR 2,021.2 trillion.

With such a big target, Indonesia's tax ratio will be in the range of 9.91% to 10.1% of the Gross Domestic Product (GDP).

In this regard, the Executive Director of the MUC Tax Research Institute, Wahyu Nuryanto, believes that the tax revenue target will still be supported by the manufacturing and trade sectors.

These two sectors have historically always made a dominant contribution to Indonesia's tax revenue. In 2022, for example, the manufacturing sector contributed 28.7% to tax revenue.

Meanwhile, the trade sector is in second place, with the contribution of tax payments reaching 23.8%.

There are several factors that will influence this condition. First, economic growth will still improve as Indonesia's economy recovers after the Covid-19 pandemic.

Second, various incentives are provided, including the relaxation of Value Added Tax (VAT) for electric vehicles. Indeed, the incentives will cut the potential VAT revenue on the delivery of electric cars and buses.

However, in the aggregate, the provision of incentives can boost business activity in the sector, which will contribute to the addition of corporate income tax and income tax on employee income.

Even so, the government must still pay attention to several factors that can erode tax revenue. Such as the decline in commodity prices that will suppress tax revenues on commodity-based goods transactions.

This can also erode tax revenue from corporations whose business activities are related to commodities. (ASP/KEN)


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