Tax Buoyancy Remains a Concern Despite High Tax Revenue

Taking into account tax revenue exceeding targets for the third time before year-end, fiscal authorities are achieving good performance this year.

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20 Des 2023 - 17.12
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Tax Buoyancy Remains a Concern Despite High Tax Revenue

Illustration - Tax policy

Bisnis, JAKARTA — Taking into account tax revenue exceeding targets for the third time before year-end, fiscal authorities are achieving good performance this year. However, the decline in tax buoyancy, which represents the elasticity of tax revenues concerning the Gross Domestic Product (GDP), remains a contentious concern.

Tax buoyancy serves as an indicator reflecting the policymakers' success in achieving a balance between economic growth or GDP and the pace of tax revenue. Under normal conditions, ideal tax buoyancy would have a ratio of one, indicating that every one percent of economic growth generates tax revenue equal to one percent.

In recent years, tax buoyancy has been quite positive, nearly reaching two, except in 2020 during the recession caused by the Covid-19 pandemic. According to the Finance Ministry, tax buoyancy was 1.94 in 2021 and 1.92 last year. These figures are considered satisfactory, especially considering that they exclude tax revenues from the Voluntary Disclosure Program (VDP) or Tax Amnesty Phase II.

This year, the outlook for tax buoyancy has plummeted to only 1.26. This figure is even lower than the 2018 level of 1.53. The lower the tax buoyancy, the more limited the country's chances to boost the tax ratio.

Cek Berita dan Artikel yang lain di Google News dan WA Channel
Editor: Yusuf Waluyo Jati
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Tax Buoyancy Remains a Concern Despite High Tax Revenue

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