The Tax-to-GDP Ratio Has Dropped In The Last 5 Years, Sri Mulyani's Subordinates: We Have To Think Hard

Illustration. (Photo: Doc. Antara)

JAKARTA - The tax ratio to Gross Domestic Product (GDP) (tax ratio) has experienced a downward trend in the last five years. The Ministry of Finance (Kemenkeu) stated that hard efforts from the government were needed to encourage the tax ratio figure.

"The tax ratio has continued to decline in five years, this makes us have to think hard about how to make taxation in the country more in line with the economic structure, because we know the economy grows and sectoral growth is different," he said in a working meeting with the DPR's Budget Agency. , last Thursday 10 June.

Based on data from the Ministry of Finance, the tax ratio was recorded at 10.37 percent in 2016, then declined to 9.89 percent in 2017. Then, the tax ratio rose slightly to 10.24 percent in 2018.

Unfortunately, in 2019, the tax ratio fell back to 9.76 percent and slumped to 8.33 percent in 2020. The downward trend in the tax ratio in 2020 is the impact of the COVID-19 pandemic.

In 2021, the government targets a tax ratio of 8.37 percent to 8.42 percent of GDP. This figure is an increase from the target for this year's tax ratio, which is 8.18 percent of GDP.

If there is no customs and excise component, the tax ratio alone tends to stagnate or stagnate in the last five years. In 2016, the tax ratio was recorded at 8.91 percent of GDP and 8.47 percent in 2017.

Furthermore, the tax ratio is still perched at the level of 8.85 percent of GDP in 2018, then slightly decreased to 8.42 percent in 2019. Last year, the tax ratio eroded to 7.7 percent of GDP.

"The trend of the tax ratio is relatively constant from 2016-2019 with a slight decline. We will also look at this as well as the logic for overall taxation, how to make the growth of tax revenue more reflective of economic conditions and economic structure," explained Febrio.

Furthermore, Febrio said, the government faces a number of challenges in increasing the tax ratio. Covering, the tax base has not been fully revealed. In addition, tax payment compliance has not been optimal.