Page 12 - Working Paper (Tax Policy Options during Economic Downturn)
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DDTC Working Paper 1315

                               Table 4 - Tax Revenue for            and in 2016 will stand at IDR 1,457 trillion or 95
                           2016 National Budget (IDR Trillion)      percent to the draft 2016 Tax Revenue Budget. The
                                                                    government seems  very  ambitious in setting its
                     No   Description            RAPBN 2016         target where it sets a 14.5 percent increases to the

                        I  Tax Revenue           1.565              projected 2015 tax revenue realization.
                       A  Domestic Taxes         1.524                 The  government takes  several  things into
                          1) Income Tax          763                consideration in setting up the target such as better
                          2) VAT                 573.6              external and domestic  economy conditions  in
                          3) Property Tax        19.4               2016; implementation of the new tax regulations;
                                                                    as  well  as  tax  administration  and  organization
                          4) Excise Tax          155.5
                                                                    improvement . In order to accomplish the target,
                          5) Other Taxes         11.8               the government focuses on four strategies such
                       B  International Trade Taxes  41.7           as (see Table 5). These four strategies are mostly
                          1) Import Tax          39.2               a  continuation from the previous determined
                          2) Export Tax          2.89               planned.
                     Source: Nota RAPBN, 2016                          Given uncertain external  environment, the
                                                                    scope and  options to domestic economy policies
                                                                    remains limited. The scope of fiscal stimulus and
                   property tax has been diminishing from 1.9 to 1.3   monetary policy are constrained due to sticky
                   percent because of the central government’s policy   inflation,  weakening  exports  and  purchasing
                   to relinquishing its authority to collect property tax   power; as well as external vulnerabilities. Support
                   to local government. Tax revenue target in 2016 is   from the expenditure side to the economy is still
                   14.8 percent higher than 2015 Budget. The number   very  low as a results of prolong procurement
                   increases  around 3 percent from the previous    process  in the most of line  ministries  leading  to
                   Revised 2015 National Budget. As mentioned, next   delays in disbursement. Capital expenditure at the
                   year tax revenue realization will be a big challenge   local government level is also not performing well.
                   to the government.                               Instead of putting in the productive sectors, local
                                                                    governments deposit their money in banks or buy
                      Revenues  from  all  major  tax  categories  up   central  government bonds. On the revenue side,
                   to  the  middle  of  2015  was  contracted,  with  the   the government has already introduced important
                   exception  of  non-oil  and  gas  income  taxes.  The   measures, such as electronic tax return submission
                   World Bank forecasted that tax revenue will only   and improvements in the income tax audit strategy.
                   reach  at  around  IDR  1,165  trillion  or  78  percent
                   of the revised budget. DDTC also predicted at the
                   beginning  of  this  year  that  tax  revenue  in  2015
                                                                    29. Time-consistency policies are important in this matter as public will
                   will be at around IDR 1,288 trillion or 86 percent   judge government’s performance according to this.

                                          Figure 4 - Percentage of Tax Domestic Revenue, 2015-2016





                                          Income tax    VAT     Property tax  Excies   Other taxes

                                                  2015 APBNP             2015 RAPBN
                    Source: Ministry of Finance, 2015
   7   8   9   10   11   12   13   14   15