World Bank: Indonesia's Tax Ratio Predicted to Remain at 10% Until 2027

JAKARTA. The World Bank projects that Indonesia's tax ratio will struggle to increase from the 10% of Gross Domestic Product (GDP) level until 2027. In a report titled Funding Indonesia's Vision 2024, the international institution estimates that Indonesia's tax ratio will only reach 10.2% in 2024, increase slightly to 10.4% in 2025, and remain at 10.5% in 2026-2027.

Quoting kontan.co.id, the World Bank mentions that Indonesia's tax ratio is relatively low compared to other middle-income and large developing countries. In fact, Indonesia's tax revenue is 6 percentage points of GDP below the average of these countries. Between 2016 and 2021, Indonesia lost an average of 6.4% of GDP in tax revenue, most of which came from value-added tax (VAT) and corporate income tax.

The report states that the widespread application of special treatment, exemptions, and tax incentives has narrowed the tax base. Meanwhile, tax avoidance and weak enforcement mechanisms have contributed to a decline in taxpayer compliance.

Previously, Budi Mulya, a Member of the Expert Council for the Prabowo-Gibran National Campaign Team, also highlighted Indonesia's low tax ratio. He compared this figure with neighboring countries such as Cambodia (16.4%) and Thailand (14.3%). Budi emphasized the need for a gradual increase in the tax ratio so that Indonesia can finance strategic programs in various sectors.

Budi also stressed the importance of improving the quality of government spending. "What we need to pursue is not just the amount of spending, but also the quality of that spending," he said. Furthermore, he reminded the importance of maintaining fairness in the tax system so that all groups in society and businesses can contribute proportionally. (KEN)