Tax Revenue Consistently Below Target

State tax revenue has consistently fallen short of targets, both in the APBN (State Budget) and APBNP (Revised State Budget). The government's high targets and the sluggish tax revenue have resulted in actual tax revenue consistently lagging behind projections, even after downward revisions in the APBNP.

Tax revenue realization for the January-September 2017 period reached only Rp 878.86 trillion, or 59.7 percent of the APBNP 2017 target of Rp 1,472.71 trillion. This is despite the fact that the 2017 tax revenue target was already reduced by 1.75 percent from the APBN 2017 target of Rp 1,498.87 trillion. The low tax revenue through the third quarter necessitates a significant effort by the government to cover the shortfall of approximately Rp 593.85 trillion in the final three months of 2017.

If tax revenue remains sluggish, budget cuts or additional financing will be necessary to prevent the budget deficit from exceeding the three percent limit mandated by the APBN law. For reference, the 2016 tax revenue realization reached only 83.5 percent of the APBNP target and 83.1 percent of the APBN target. In 2015, tax revenue realization was 92 percent of the APBNP target and 68.8 percent of the APBN target.

(Read Databoks: 2018, Tax Revenue Target Increases by 9.3 Percent)