Jakarta. The government has set a goal to collect Rp 2,189.3 trillion (around $141 billion) in tax revenue next year.

According to the Finance Ministry, the government takes into account the country’s growth forecasts and tax reforms when setting that target. About Rp 1,209.3 trillion is set to come from income tax, while the targeted value added tax and luxury tax for the year stands at Rp 945.1 trillion. The government is seeking to collect Rp 27.1 trillion in land and building tax next year. The remaining Rp 7.8 trillion will come from other forms of taxes. 

“It is clear that we will continue to adopt our ‘intensification’ and ‘extensification’ strategies,” Suryo Utomo, a senior official at the Finance Ministry, said on Tuesday. 

The so-called extensification strategy refers to signing up unregistered taxpayers so they can contribute to the government’s tax revenue. The intensification strategy focuses on boosting the tax collection from registered taxpayers. 

Ajib Hamdani, the economic policy analyst at the Indonesian Employers Association (Apindo), admitted that the tax target would be a tough one to unlock. The government’s plan to raise the value-added tax to 12 percent will also likely take a toll on the people’s purchasing power. 

“Plans for excise extensification --particularly on plastic commodities and sugary beverages-- will add burden to the private sector, be it the corporate or the micro, small and medium enterprises [MSMEs],” Ajib said. 

Didik Rachbini, a senior economist at think-tank Indef, also commented on the target, saying that the government needs to “continue the tax reforms, including digitalization and expanding the tax base.” 

The government also needs to take better advantage of the tax potential from the digital economy as use of e-commerce and fintech grows. Creative economy --particularly tourism-- also holds huge potential as a source of tax, according to Didik.

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