16.6% Tax Revenue Growth? Indonesia’s Government Has Its Work Cut Out For It In 2019
The Indonesian government aims to increase tax revenue by 16.6% in 2019, from Rp1,977 trillion (US$152 billion) to Rp2,281 trillion (US$184 billion). That’s the goal, at least; whether or not it can reach it remains to be seen. In 2018, the government managed to increase tax revenue by 6%, according to the finance ministry’s early estimates . Tax revenue isn’t the only thing Indonesia needs to improve in order to achieve its ambitious economic growth target of 5-6% this year—but it sure would help.
What can the government do to get more tax revenue growth in 2019?
The Indonesian government has its work cut out for it in 2019 if it wants to reach its tax revenue growth target of 16.6%. Here are a few things the government can do to get more tax revenue growth:
1. Improve tax administration and compliance.
2. Increase the number of taxpayers.
3. Broaden the tax base by expanding the coverage of existing taxes and introducing new taxes.
4. Increase tax rates.
5. Enhance enforcement measures to combat tax evasion and avoidance.
6. Implement an effective public information campaign to promote voluntary compliance with the tax laws.
7. Reform the structure of the taxation system to make it simpler, more efficient, and more equitable . 8. Restructure value-added tax (VAT) so that most products are taxed at a single rate. 9. Lower VAT on basic necessities like food and medicine to help low-income households cope with rising prices. 10. Increase funds allocated to social services such as education, health care, and infrastructure development from 4% to 8%.
Kickstart economic growth
The Indonesian government has its work cut out for it if it wants to meet its tax revenue growth target of 16.6 percent in 2019. The country’s economy has been struggling in recent years, growing at its slowest pace since 2009 last year. To kickstart economic growth and bring in more tax revenue, the government will need to implement some major reforms. These could include reducing fuel subsidies, reforming the labor market, and improving the investment climate. The government will also need to boost tax collection efforts and crack down on tax evasion. With these measures, the government can hope to reach its 16.6 percent tax revenue growth target and help spur economic growth in Indonesia. The President Widodo administration is looking to implement a number of measures to reform the Indonesian economy and put it back on track. However, not everything is going according to plan so far; President Widodo recently said that his first 100 days in office were less than satisfactory due to lack of support from other political parties, poor public support ratings, and sluggish economic growth.
The president is looking for solutions that would jump-start the country’s flagging economy – but not all are convinced he’ll be able to deliver on his promises given the many challenges facing him.
Eliminate corruption and make tax collection more efficient
The Indonesian government has its work cut out for it if it wants to achieve its target of 16.6% tax revenue growth in 2019. Corruption and inefficient tax collection are two of the biggest problems facing the country. To eliminate corruption, the government needs to increase transparency and accountability, and make it easier for taxpayers to comply with the law. To make tax collection more efficient, the government needs to invest in better technology and infrastructure, and improve communication between taxpayers and tax authorities. Without such changes, there is little hope that the government will meet its ambitious goal of increasing tax revenues by 16.6%. But even if it doesn’t reach this goal, the government should still focus on improving tax compliance rates and creating a fairer system for everyone.
Focus on collecting taxes from foreign companies operating in Indonesia
u ant to collecting taxes from foreign companies operating in Indonesia, for example. The country’s Finance Minister said the tax revenue target for next year is 16.6 percent, a significant increase from this year’s target of 11 percent. However, he acknowledged that to reach this goal, there will be no shortcuts. He explained that the Indonesian economy needs to grow at least 6.3 percent annually to meet this and other targets, as well as reducing inflation by 1.2 percentage points annually and cutting public debt by 2 percentage points per year – which sounds like a tall order but all are goals set out by President Joko Widodo at his latest Cabinet meeting on Monday.
It seems the government has its work cut out for it in 2019 if it wants to boost tax revenues by 16.6%.
Make legal tax avoidance harder
The Indonesian government has announced its intention to target a 16.6% increase in tax revenue for the 2019 fiscal year. This is no small feat, considering that the country’s tax-to-GDP ratio is currently one of the lowest in Southeast Asia. There are a number of factors to consider when trying to explain this discrepancy. One significant factor is low compliance among firms. Research by Indonesia’s Ministry of Finance found that only 4 out of 10 companies registered with the ministry actually submit their income and expense statements annually, and only 8 out of 10 pay taxes on their profits at all. Making legal tax avoidance harder will go some way towards achieving this goal; reforms such as centralizing company registration and requiring greater transparency from businesses could reduce informal economies and improve tax compliance in both formal and informal sectors.