Sri Mulyani: Tax Revenues In 2020 Have The Potential To Drop 15 Percent Of The Target

Minister of Finance, Sri Mulyani. (Photo: Instagram @smindrawati)

JAKARTA - Finance Minister Sri Mulyani Indrawati estimates that state revenue from taxation this year will experience a very significant decline of 15 percent from the APBN change target of IDR1,404.5 trillion.

"State income from taxes has dropped significantly. We initially estimated it would only drop 10 percent, but now it has the potential to drop 15 percent," he said, at the 7th OECD Forum on Green Finance and Investment in Jakarta, Friday, October 9.

Sri Mulyani explained that the government has a combination of problems between decreased income and increased spending due to the pressure of the COVID-19 pandemic. This is why the deficit must have exceeded 3 percent.

Furthermore, Sri Mulyani said, because deficits in Indonesia are regulated by law, the government must really propose an emergency law that allows a deficit of more than 3 percent. Therefore, Presidential Decree Number 72 of 2020 was passed.

Although tax revenue is estimated to fall by 15 percent, the amount of the APBN deficit for this year remains in accordance with the agreement, namely 6.34 percent of the Gross Domestic Product (GDP).

"How big is the deficit? This year because the company will increase significantly to 6.3 percent, an increase from the originality of 1.7 percent," he said.

According to him, so far Indonesia has been known as a country capable of managing and maintaining the deficit level well because in the last 20 years the APBN deficit has always been below 3 percent.

Not only that, he ensured that the total debt-to-GDP ratio would not exceed 60 percent in accordance with Presidential Decree Number 72 of 2020 even though tax revenues would fall deeper.

"In the last 20 years we have adopted a very prudent fiscal policy where the deficit cannot exceed 3 percent and the ratio of total debt to GDP is not allowed to exceed 60 percent," he said.