Increase Regional Tax Revenue, Minister Of Finance Gaugkan Modernization

JAKARTA - Indonesian Finance Minister Sri Mulyani Indrawati assessed that currently, tax administration modernization is needed. This is to increase local tax revenue or local taxi power.

Currently, he continued, the level of tax revenue and regional levies has only reached 60 percent.

"We see that the regional taxes and levies on the collection rate are only 60 percent, meaning that modern and efficient tax administration at the regional level will help increase the ratio of regional tax levies without increasing the burden by increasing the rate," said Sri Mulyani quoting Antara, Tuesday, October 3.

According to the state treasurer, the fundamental problem in current regional taxation is to find the most effective way related to how to provide access to mandatory basic services and create ease of doing business for the community. This then becomes the basis for taxation and regional retribution.

He explained that the government had issued Government Regulation (PP) Number 35 of 2023 which regulates the area of intervention to strengthen local government tax revenues (Pemda).

To encourage the modernization of tax administration within the scope of the local government, Sri Mulyani explained several strategies carried out by the government. First, by optimizing the collection of central and regional taxes by utilizing joint data between the center and the regions.

"We at the Ministry of Finance, of course, with data on taxation that is much wider and national, can work together with the regions to take advantage of this data in increasing local taxi power," said Sri Mulyani.

Second, by continuing to increase guidance and supervision of the modernization of regional tax administration. Third, by increasing the competence and technical capabilities of regional taxation human resources (HR).

Fourth, by collaborating using information data and digital systems. Sri Mulyani gave an example of the current steps taken by the Ministry of Finance which is perfecting the Core Tax System for Tax Systems to create a more effective central and regional tax infrastructure.

"Currently the Ministry of Finance is investing in the Core Tax System, this is a very important and large investment that will increase our taxability to be equivalent to tax infrastructure in other countries. I hope this will provide benefits to all regions," said Sri Mulyani.

Previously, the Expert Staff of the Minister of Finance for Tax Compliance Yon Arsal said that the core tax system currently in the development process could optimize services and supervision of taxpayers.

The plan is that the tax reform will be ready to be implemented at the beginning of next year. Another benefit of the core tax system is the creation of an integrated system that reduces manual workload, encourages more productive, and increases employee capability.