Former Sri Mulyani's Subordinate Explains Because Economic Growth Increases But Taxes Drop

Tax observer who is also the former Special Staff of the Minister of Finance Sri Mulyani, Yustinus Prastowo (Photo: Antara)

Tax observer who is also the former Special Staff of the Minister of Finance Sri Mulyani, Yustinus Prastowo revealed that there were several factors that caused the decline in tax revenues, although economic growth in the second quarter of 2025 was recorded at 5.12 percent.

"The economy is growing but taxes are down. How can it be? BPS has just announced the realization of Q2's economic growth of 5.12 percent. The hope then arises in the midst of various uncertainties and challenges that come and go. But why is tax revenues falling? There are several causes and explanations in my opinion. " he was quoted as saying in the official upload of social media X @prastow, Friday, August 8.

For information, until the first semester of 2025, the realization of tax revenues was recorded at IDR 837.8 trillion or 38 percent of the target. This number has decreased by 6.21 percent compared to the same period last year.

According to Prastowo, the first cause was that there were non-repetitive incidents, such as tax restitutions where in early 2025, there was a large return on the overpayment of taxes, which did not occur in the previous year, thus affecting net tax revenues.

"Of course this has an effect on our net acceptance. In the second semester of 2025, restitution should be sloping and normal," he explained.

He conveyed that the second reason was the difference in recording time between economic performance and tax revenue.

Prastowo explained that in tax administration, it was carried out based on the full month to record and calculate obligations, while reporting and payments were made the following month.

"For example, the performance in May recorded by BPS in the second quarter will become tax revenue in June or the third quarter. This is relevant to point 1 regarding restitution," he said.

Prastowo said the third factor was the influence of the change in Value Added Tax (VAT) rates, which initially, the government planned to increase the VAT rate to 12 percent starting January 1, 2025. However, the policy was canceled, and the tariff remained at 11 percent

"The target, which has taken into account the increase in VAT, has become too big and the gap is wide," he said.

In addition, he said that the Government canceled the VAT rate and continued to provide various stimuli and incentives, including tax incentives.

According to him, this will reduce the realization of tax revenues, although as a policy it has a positive impact on the economy, so that in assessing tax performance, it is also better to take into account tax expenditure.

He added the next factor, namely the implementation of the beliax system in early 2025., where there are several features in the system that are not yet fully optimal, causing delays in paying taxes to the following months

"This is gradually normal and should be stable in the second semester," he said.

Prastowo conveyed the next cause, namely the existence of a growing, stagnant or down sector.

According to him, there can be growing sectors that get large tax incentives or hard to tax sectors, while sectors that are stagnant are actually big contributors to revenue.

"Regarding government spending, at the beginning there was adjustment and efficiency, of course it has an effect on tax revenues. The opening of the APBN expenditure faucet will have an impact on the economy and taxes," he said.

He hopes that economic performance will consistently improve, tax revenues will recover quickly, and the government can continue to focus on efforts to create jobs, maintain purchasing power, and equalize welfare.