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Indonesia: Tax to GDP ratio assumption revised down

The government and the House of Representatives on Monday agreed to revise down the tax to gross domestic product (GDP) ratio assumption for the 2020 state budget to 10.57 to 11.18 percent from the initial figure of 10.6 to 11.2 percent.

This year, the tax to GDP ratio was projected at 12.2 percent. Meanwhile, the tax to GDP ratio in 2018 was recorded at 11.5 percent.

Finance Ministry fiscal policy head Suahasil Nazara said the government assumed that the global economic slowdown would push the figure down, but he still believed that tax revenue would still grow this year in line with the country’s economy growth despite the constant turbulence.

“Because if our economy grows, our tax [revenue will also grow,” said Suahasil before lawmakers in a plenary session on Monday.

Government officials and lawmakers also agreed to set the national income to GDP ratio at between 12.6 and 13.72 percent.

Furthermore, non-tax revenue to GDP is expected to be at 1.98 to 2.47 percent. Of the overall GDP, state expenditure is projected to contribute between 14.35 and 15.24 percent with a deficit of 1.75 to 1.52 percent. (bbn)

Source: https://www.thejakartapost.com/news/2019/07/09/tax-to-gdp-ratio-assumption-revised-down.html