Economist Reminds Government To Be Careful Determines This Year's Tax Policy

Photo: Doc. Antara

JAKARTA - Bright Institute economist Awalil Rizky reminded the government to be careful in determining tax policies this year.

In the General Hearing Meeting (RDPU) with the DPR RI Budget Agency (Banggar) in Jakarta, Wednesday, February 12, he highlighted that the tax ratio is still relatively low, at the level of 10.12 percent of gross domestic product (GDP) in 2024.

He agreed that efforts were needed to boost the tax ratio. However, the economic condition this year is considered less supportive to implement this effort.

"It needs to be considered when talking about taxation, that on the one hand the government needs tax support, but on the other hand various indicators show it is difficult to get large tax revenues in 2025," Awalil said, quoted by Antara.

He emphasized that the 2025 tax revenue target should not be forced without considering unstable economic conditions.

For example, the Organization for Economic Cooperation and Development (OECD) through the OECD Indonesia Economic Survey report released in 2024 recommended the Government of Indonesia to lower the lower limit on non-taxable income (PTKP) to expand the tax base.

Currently, the PTKP threshold is IDR 54 million per year or IDR 4.5 million per month for private people. As a result, some of the middle class who are growing are not subject to income tax (PPh). Meanwhile, according to OECD, that amount is equivalent to 65 percent of GDP per capita.

Awalil hopes that the Indonesian government can carefully consider these recommendations. Although it sounds simple, the effect can be significant.

"Don't apply it in 2025 if you can. In my opinion, if you want to optimize (tax revenue), focus on those who don't comply, specifically there. Don't make new policies," he said.

On the other hand, he also advised the government to reduce ineffective tax spending in order to reduce the country's fiscal burden.

Tax incentive programs that can be postponed, such as tax amnesty, he also hopes that it will not be implemented much this year.

"If I may suggest, maybe not a tax amnesty again. Later the trust to carry out tax reform will be weaker. (Tax program) can use other methods," he said.