Faisal Basri: Not A Single Country Has Experienced A Decrease In Tax Ratio As Bad As Indonesia

JAKARTA - Indef's senior economist, Faisal Basri, has criticized the country's taxation. Faisal said Indonesia's tax ratio was the worst in the world, falling for almost eight consecutive years and even only one digit left.

"Not a single country has experienced a decrease in tax ratio as bad as Indonesia, for nearly 8 consecutive years. Only one digit", he wrote on his Twitter account @FaisalBasri, quoted by VOI, Thursday, March 4.

Not a single country has experienced a decline in tax ratio as bad as Indonesia, for almost 8 consecutive years. Only 1 digit anyway. pic.twitter.com/hr5ZwkIz5z

- Faisal Basri (@FaisalBasri) March 3, 2021

In the data uploaded by Faisal Basri, the decline was recorded in the 7 years since 2013, when the tax ratio slightly decreased by 0.1 percent from 11.4 percent in 2014 to 11.3 percent.

Except for 2018, which had increased by 0.3 percent from 9.9 percent to 10.2 percent. However, the ratio continues to slope.

Finally, in 2020 due to the pandemic, the ratio decreased significantly by 1.5 percent, from 9.8 percent to 8.3 percent. The tax ratio itself is the ratio between taxes received by the state and gross domestic product (GDP).

How to calculate it, the tax ratio divided by GDP as a percent. This means that the tax ratio provides an overview of the state's ability to collect taxes from annual income. The low tax ratio in Indonesia is an indicator of the low tax compliance of the public.

"Tax revenue rises slower than the increase in GDP. This means that the economy is growing but more and more are not caught by taxes", explained Faisal.

Indonesia's tax ratio had touched the highest level for the last 20 years in 2008. At that time, the country's tax ratio reached 13.3 percent.

Unfortunately, this achievement did not last long and fell in the following year to 11.1 percent. Since then, the slowdown in the tax ratio has continued, and especially when the COVID-19 pandemic hit the country's economy.