Tax Expenditure During The Genting Pandemic IDR 299.1 Trillion, Which Sectors Can?

Illustration. (Photo: Pixabay)

JAKARTA The Fiscal Policy Agency (BKF) of the Ministry of Finance (Kemenkeu) reported that the value of tax spending recorded by the government throughout 2021 reached IDR 299.1 trillion, equivalent to 1.76 percent of gross domestic product (GDP).

This figure increased 23.8 percent compared to tax expenditure in 2020 which was valued at IDR 241.6 trillion or 1.56 percent of GDP.

Head of the BKF of the Ministry of Finance, Febrio Kacaribu, said the figure was distributed to various sectors, especially for overcoming the impact of the COVID-19 pandemic and economic recovery.

"Utilization of incentives in the context of dealing with the impact of COVID-19 such as VAT facilities and the most important thing is the facility for imports of vaccine procurement," he said in a written statement on Monday, December 26.

According to Febrio, tax spending complements development support from the expenditure side. He said, tax spending is expected to have a large multiplier effect and can improve community welfare and develop MSMEs.

"Based on its utilization, the estimated value of tax spending in 2021 aimed at improving community welfare and developing MSMEs reached IDR 229 trillion or 76.5 percent of total tax spending," he said.

Febrio added that the tax expenditure was mostly in the form of exemptions from taxable goods and services such as basic necessities, public transportation services, as well as education and health services, which were intended to maintain people's purchasing power.

Furthermore, there are VAT facilities that are not collected for small entrepreneurs and final PPh facilities for MSMEs that support the growth of the national MSME industry.

"In the future, the government is trying to read all the dynamics that occur due to geopolitical pressure and various forms of global commitment related to the implementation of the green economy and the consensus on international tax reforms, which will affect tax incentive policies," Ferbrio concluded.