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Slow revenue growth attributed to new tax refund policy

Jakarta Post - July 18, 2019

Bambang Nurbianto, Jakarta – Finance Minister Sri Mulyani Indrawati says the slow growth of tax revenues in the first half of 2019 was caused by the implementation of a tax refund acceleration policy that required the government to spend much more money.

She said she was optimistic tax revenue growth would soon improve. "The acceleration of tax refunds was introduced in May last year," Sri Mulyani said as quoted by kontan.co.id on Wednesday. "We hope it will back to normal in the second half [of the year]."

Previously, the Directorate General of Taxation reported that tax revenues grew 3.75 percent to 603.34 trillion (US$43.29 billion), much lower than the 9.5 percent target set in the 2019 state budget. Meanwhile, the growth in the first half of 2018 was recorded at 14.3 percent.

The tax office revealed the manufacturing sector contributed Rp 160.62 trillion to tax revenues, down 2.6 percent year-on-year (yoy), and the mining sector contributed Rp 33.43 trillion, down 14 percent yoy. The Finance Ministry said the tax refunds for the two sectors grew 20.8 percent in the first half.

The ministry noted that tax refunds in the mining sector grew 41.3 percent yoy, while the revenues from its income taxes slowed down.

Meanwhile, the tax revenues from the trade sector only grew 2.5 percent, but its tax refunds grew 41.3 percent yoy, while the value-added taxes from imports grew 6.7 percent.

Director General of Taxation Robert Pakpahan said that his office relied on the manufacturing and trade sectors to boost revenue growth in the second half, while the mining sector was still under pressure.

The government estimated that the revenue shortfall would reach Rp 140.03 trillion by the end of 2019. (bbn)

Source: https://www.thejakartapost.com/news/2019/07/18/slow-revenue-growth-attributed-to-new-tax-refund-policy.html