Citizens wait to pay their taxes at the Directorate General of Taxation in Jakarta on Friday (31/3) during the tax amnesty program. The tax amnesty program kicked off on July 1, 2016, and ended on March 31, 2017.
Of the tax revenue target of Rp 1.28 quadrillion (US$128.4 billion) this year, as of September, only about 60 percent had been collected (Kompas, 7/10/2017).
The Directorate General of Taxation has to bear the very heavy responsibility. Will the directorate general be able to collect the remaining tax-revenue deficit of Rp 513 trillion by the end of the year? The figure is not a small number, especially in an economy that remains relatively stagnant. The inability to meet the target has the potential to increase fiscal risk and threaten economic growth. Impacts could be felt in job creation and the poverty rate.
In order to address the problem, two options are open to choose. First, increasing the state budget deficit, which means forcing the government to increase its debt. This is a problematic measure because of the spotlight placed on the current debt and the constraints of current law, which limits the deficit to remaining under three percent of gross domestic product.
The second option is to save by cutting government spending, especially capital spending or infrastructure spending and on budget allocations for ministries/agencies or transfers to regional administrations. A combination of the two is also possible. The question is to what extent can it be done?
We have not yet learned of a detailed strategy of the directorate general of taxation to cover the shortfall in tax revenue, but extensification and intensification continue to be carried out by combing through potential new taxable objects. This step has been accompanied by the strengthening of tax compliance and the increased efforts of law enforcement to target taxpayers who have shown indications of tax evasion.
Despite the hard work of the directorate general of taxation, there is a possibility that the shortfall will remain unavoidable, as in previous years. So far, the Finance Ministry remains optimistic the target can be reached, but a number of its maneuvers have begun to trigger unrest among the community. After a tax-collection plan for writers was protested by the writers\' community, businesspeople also protested against a planned tax on digital sales through e-commerce and new tax regulations in the KUP draft bill, which are seen to overburden businesspeople and close the space for business growth. Not to mention the tax collection measures that seem to have the nuance of ijon (taking something while still being developed).
Exploring potential areas for tax collection is a must because of the very low tax ratio. However, this must be done in such a way so as not to raise a sense or impression of injustice among the public or be counterproductive for the economy as a whole. On the contrary, in a sluggish economic situation, tax instruments should be stimulating tools that drive the real sector. In this regard it is only natural that there be a sense of urgency to find a solution that does not create turmoil.
In the midst of today\'s dilemma, we have not seen this spirit among the nation’s elite, as reflected by the persistence of various proposals for budget allocations that seem to squander the state budget. From the government itself, we have not seen any courage to postpone or reschedule mega infrastructure projects that are not urgent. Efficiency and priority sharpening can longer be negotiable.
