Jakarta – The government targets a tax to gross domestic product (GDP) ratio of 11.8 to 12.4 percent in 2020, compared to this year's target of 12.2 percent. In 2018, the tax to GDP ratio was 11.5 percent.
The figure was proposed by Finance Minister Sri Mulyani Indrawati to the House of Representatives in the plenary session on Monday when the minister revealed the macroeconomic indicators and basic fiscal policy for the 2020 state budget.
She said that among the efforts to boost the tax to GDP ratio included taxation reform to increase tax revenue and the improvement in competitiveness of both exports and investment through fiscal incentives to balance the external pressure.
"All those policies are expected to be able to increase the tax to GDP ratio in 2020," Sri Mulyani said as quoted by kompas.com, adding that the wide range of 11.8 to 12.4 percent was a realistic target.
She said the floor target of 11.8 percent was similar to the current taxation performance.
"We hope we will be able to show positive growth in our tax revenue," Sri Mulyani said, adding that there were several factors that were considered before deciding the tax ratio, including the trade balance in April, which was still in deficit at US$2.5 billion and the revision in customs policy
She said the government would also still consider a number of risks that may emerge in the second quarter of 2019 before the tax to GDP ratio projection was included in the financial note of the 2019 state budget. (bbn)