Prabowo-Gibran's Ambition To Increase Tax Ratio Is 16 Percent, Observers Say This

The General Election Commission (KPU) of the Republic of Indonesia has officially appointed presidential and vice presidential candidate pair number 2, Prabowo Subianto-Gibran Rakabuming Raka, as the winner of the 2024 General Election (Pemilu).

The Prabowo- Gibran pair want the Indonesian tax ratio to be at the level of 16 percent of gross domestic product (GDP).

Senior Analyst Indonesia Strategic and Economic Action Institution, Ronny P Sasmita assessed, the tax ratio target of 16 percent, such as neighboring countries such as Thailand, launched by Prabowo and Gibran, is too high and will burden the business world and reduce purchasing power.

"To achieve high growth, it is very contradictory to the tax ratio ambition. If the ambition to increase the tax ratio is in the form of haphazard tax increases, it will burden the business world and reduce purchasing power," he explained to VOI, Thursday, March 21, 2024.

According to Ronny, raising the Indonesian tax ratio is very difficult at the level of 16 percent if the government is unable to raise economic growth above 6 percent.

"It is not easy to increase Indonesia's tax ratio. Let alone to 16 percent, to 12 percent, it is difficult if the government is unable to raise economic growth above 6 percent," he said.

Ronny reminded that the high tax ratio ambition will be counterproductive to high economic growth ambitions, if not carried out carefully.

"The ambition of Prabowo Gibran's economic growth is very ambitious, even overshooting, high tax ratio ambitions can also be counterproductive to growth, if not carried out with a clear concept," he said.

According to Ronny, the investment climate will still be as before, considering that the Prabowo-Gibran economic platform is the sustainability of Jokowi's economic platform.

However, Ronny estimates that there will be differences after the beginning of next year, when the Prabowo Gibran pair will really bring something new that the business world and investors expect or vice versa.

Ronny emphasized that the Prabowo-Gibran pair should not talk much about numbers, but rather what policy plans will be carried out to raise economic growth to 6 percent.

"And what fiscal plan they will apply to lift Indonesia's tax ratio. If you just repeat Jokowi's "policy", or just talk about free lunch which is not yet clear, then 6 percent of growth will still be difficult to obtain and 16 percent tax ratio will be wishful thinking," he concluded.