Economist Warns Against Taxing Online Gambling as Indonesia Targets 'Underground Economy'
Jakarta. Deputy Finance Minister Anggito Abimanyu faces criticism following his recent suggestion to tax revenues from the underground economy, including online gambling and gaming. Anggito argued that this sector represents untapped tax potential, citing online sports betting popular among Indonesians as an example of economic activity that goes unreported.
The underground economy refers to unrecorded or unreported economic activities not included in official statistics. According to Abimanyu, Indonesians frequently participate in online betting on British platforms where gambling is legal, but profits from such activities escape Indonesian tax oversight.
"We're aware that many underground economy activities go unregistered and untaxed," Abimanyu said during an academic address at the Gadjah Mada University (UGM) Vocational School Senate meeting in Sleman on Monday.
However, economists have pushed back. Nailul Huda, an economic researcher at the Institute for Development of Economics and Finance (INDEF), contended that such a tax plan legitimizes harmful activities rather than curbing them.
"I don't believe Anggito should have made that statement," Huda told reporters on Wednesday. "Taxing online gambling doesn’t combat the issue; it implicitly legitimizes it by acknowledging it as lawful income, which is detrimental to the country."
Critics argue that Anggito's approach risks making online gambling appear legal and compliant with national laws, which could encourage more Indonesians to engage in it. Huda warned that online gambling operators might justify their activities as lawful due to tax contributions, a stance he opposes.
The government has set a tax revenue target of Rp 2,189.3 trillion in the 2025 State Budget. This target is divided across various types of taxes, with income tax (PPh) projected to contribute Rp 1,209.3 trillion; value-added tax (VAT) and luxury goods tax expected to generate Rp 945.1 trillion; property tax at Rp 27.1 trillion; and other taxes at Rp 7.8 trillion.
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