Economist: Tax Revenue Needs To Be Improved To Fund Various Development Agendas

Illustration. (Photo: Doc. Antara)

JAKARTA - Economist of the Institute for Economic and Community Research, Faculty of Economics and Business, University of Indonesia (LPEM FEB UI) Teuku Riefky said tax revenues needed to be increased to fund various development agendas such as economic growth and energy transition.

"Regarding tax revenues, this is indeed a very urgent issue in Indonesia and it is necessary to immediately increase our tax revenue or our tax ratio to be able to then fund various programs, especially to encourage long-term development agendas such as economic growth and energy transition," said Riefky, quoted from Antara, Friday, March 22.

To finance various kinds of development programs, of course, you can't just rely on tax revenues from value added tax (VAT), so it needs to be combined with other instruments.

"This can not only be completed by VAT, so it needs a combination with various other instruments," he said.

According to him, the increase in VAT towards 12 percent is not a problem, but it needs to be supported by other programs such as increasing tax compliance so that tax revenues can continue to increase.

"This VAT can still be increased to 12 percent but needs to be supported by other programs such as for example reducing informationality, increasing tax compliance and others. This is indeed very much needed so that our tax revenue can continue to increase," he said.

He hopes that the implementation of various government policies, including related to tax revenues, can be optimized to increase state revenues.

"Well, is it better at 11 percent, it doesn't seem like it. If it can be increased to 12 percent better, but this is not enough, and it needs to be continued with various other combinations of policies," he said.

Previously, the Director General of Taxes at the Ministry of Finance, Suryo Utomo, ensured that the government would continue to review the policy of increasing value added tax (VAT) by 12 percent by 2025.

He explained that the policy had been stipulated in Law Number 7 of 2021 concerning Harmonization of Tax Regulations (UU HPP). However, the government is also monitoring the latest developments.

"We will continue to carry out the study, and the government's transition will also occur, so we are also waiting," said Suryo during a Working Meeting with Commission XI of the DPR RI in Jakarta, Tuesday, March 19.