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Kadin warns elected govt to be cautious over state revenue agency formation

Tempo - May 3, 2024

Amelia Rahima Sari, Jakarta – The Indonesian Chamber of Commerce and Industry (Kadin) urged the government to be careful in realizing the plan to establish a State Revenue Agency.

Deputy Chair of Kadin for Fiscal and Public Policy, Suryadi Sasmita, said on Friday that forming a separate state revenue authority from the Ministry of Finance was not easy. The management of state finances by two separate institutions could pose challenges in synchronizing the data.

Suryadi was worried that a separate State Revenue Agency would cause a disproportionate management of state finances. In this case, state spending could potentially be bigger without considering the burden on state revenue authorities.

On the other hand, a State Revenue Agency has the potential to increase the tax ratio. "So, the State Budget (APBN) can provide adequate spending allocation for various development, to realize the vision of a Golden Indonesia 2045," he said

Previously, Prabowo Subianto expressed his desire to separate the Directorate General of Taxes from the Ministry of Finance. He said that Indonesia's tax ratio fell behind neighboring countries, such as Thailand and Vietnam.

Prabowo said that the tax ratio in these countries had reached 16 percent and 18 percent. Meanwhile, Indonesia's tax ratio in 2022 was only 10.39 percent.

With such a scheme, according to him, the Directorate General of Taxes, which is tasked with collecting taxes, could be separated from the Ministry of Finance, so that the institutions for managing state assets and revenues would be separated. Prabowo believed that a system like this could increase the tax ratio by 5 to 6 percent.

Source: https://en.tempo.co/read/1863596/kadin-warns-elected-govt-to-be-cautious-over-state-revenue-agency-formatio