Prabowo Subianto's Government Is Predicted By Jungkir To Return To Fulfill The State Revenue Target Of IDR 3,000 Trillion

A number of workers walked home on Jalan Sudirman, Jakarta, Wednesday (22/11/2023). (ANTARA/Asprilla Dwi Adha/foc)

JAKARTA - President Prabowo Subianto needs more effort to achieve state revenues which are targeted to reach IDR 3,000 trillion. The increase in Value Added Tax (VAT) to 12 percent starting next year is said to be one way for the government to meet this target.

Prabowo Subianto's government has set a state revenue target of IDR 3,005.1 T. This target is listed in the 2025 State Revenue and Expenditure Budget (APBN). This figure also increased from the original draft of IDR 2,996.87 T.

Finance Minister Sri Mulyani said tax revenues would contribute Rp2,490.9 trillion to total state revenues next year.

"The non-tax state revenue (PNBP) will reach Rp513.6 trillion and grants of Rp0.6 trillion," said Sri Mulyani during a press conference at the Presidential Palace, Tuesday (10/12/2024).

President Prabowo Subianto welcomed regional heads after the handover of the budget implementation list (DIPA) and the list of transfer allocations to the regions (TKD) for the 2025 fiscal year, as well as the launch of the 6.0 version of the electronic catalog (e-catalog) at the State Palace, Jakarta, Tuesday (10/12/2024) (ANTARA/Sigid Kurniawan/nym).

Citing the website of the Ministry of Finance, the source of state revenue is all income obtained to finance state spending. Or it can also be interpreted that state revenue sources are all state-owned money or assets.

Sources of state revenue in the APBN in Indonesia are divided into three, namely taxes, non-tax state revenues (PNBP), and grants.

The increase in the state revenue target next year is due to an indication of an increase in non-tax state revenue (PNBP) to Rp513.64 trillion from the previous Rp505.38 trillion in 2024. Meanwhile, next year's state spending will reach Rp3,621.3 trillion. Of this total, central government spending is Rp2,701.4 trillion and transfers to the regions are Rp919.9 trillion.

Central Government spending will be aimed at supporting development priotas programs such as the Free Nutrition Food Program (MBG), food and energy self-sufficiency, education, health, and national protection.

However, the economist of the Bright Institute, Muhammad Andri Perdana, doubts indications of an increase in PNPB as mentioned by Sri Mulyani. Andri said that Donald Trump's election as President of the United States was one of the reasons for doubts about the increase in PNBP next year.

Andri said, commodity prices, which are included in the PNBP, will indeed experience a very high increase in 2022. This is the result of the Ukraine-Russia war, so this has a direct impact on the 2023 PNBP. But when Trump defeated Kamila Harris in the US Presidential Election some time ago, Trump's soft stance towards Russia is predicted to contribute to commodity prices.

The price of coal, gas, and other commodities could fall due to Trump's victory. So that in the future, it can reduce the price of gas commodities again, only coal. When these prices fall, it is difficult to achieve these targets," Andri explained.

On that basis, Andri assessed that it would be difficult for the government to achieve the state revenue target of up to Rp. 3,000 next year. Especially if you look at the sluggish economic situation as it is today. Andri said the government's decenterate boosted state revenue in order to meet this target.

He also said the government would turn its heads against targets in several ways, including taking a tax amnesty policy which should be paid by revealing assets and paying ransom. This step could be an option for the government to withdraw money from taxpayers who are allegedly keeping it secret in tax-free countries.

This is not the first time the government has imposed a tax amnesty policy. Previously, a similar policy had been implemented in 2016 and 2022, but the results were not as expected.

Executive Director of the Center of Economic and Law Studies (CELIOS) Bhima Yudhistira said the tax amnesty was a blunder policy to increase tax revenue. Too frequent tax amnesty will actually reduce the compliance of the rich and big corporations. The evaders, he said, would think the government would continue to carry out tax amnesty.

Another way besides imposing a tax amnesty is to increase VAT to 12 percent in the hope of being able to increase state revenue from the tax sector. However, Andri predicts that it will be difficult to boost tax revenue next year, when the tax rate is increased.

"Outlook is based on optimism, but it is difficult to achieve it. The government seems to be desperate so that it imposes a tax amnestyjilid III, and the increase in VAT is 12 percent," explained Andri.

"Tax revenue without being increased is difficult, especially if it is increased. Tax amnesty is also not an instant income tool," he said.

Contacted separately, economic observer CelIOS Nailul Huda assessed that the revenue target was quite heavy to achieve considering the condition of Indonesia's economic growth which was only around 5 percent.

Of the targeted figures, what is increasing is the tax revenue deposit with a portion of 65 percent more. But according to Huda, if you look at the growth side, the growth in tax revenues next year will reach 13 percent, which is taken from the 2025 tax revenue target minus the 2024 tax revenue outlook.

"This growth is much higher than the growth in natural tax revenues which I calculated at 7.7 to 9.7 percent. So there is an additional effort to achieve the tax revenue target. Yes, this is what I see, why the government enforces an increase in VAT rates," he explained.

However, Huda continued, state revenues from taxes will be hampered by household consumption that has not been optimal.

"To cover the shortage, PNBP seems to be relied on. However, this will be limited and dependent on global commodity prices next year. If commodity prices increase, I think our PNBP can rise. However, it seems that there will be a trade off with an increase in fuel prices," said Huda.