November 14, 2023
JAKARTA – The government has decided to alter its 2023 state budget to reflect an upward revision in its revenue collection target, which allows the country to afford higher spending.
These changes were made through Presidential Regulation No. 75/2023, which revised the previous posture stipulated under Presidential Regulation No. 130/2022. The government said it had discussed the matter with the House of Representatives Budget Committee and Bank Indonesia.
Under the new regulation, tax revenue, including customs and excise, is upgraded by 4.58 percent to Rp 2.11 quadrillion (US$130 billion) from the previously stipulated Rp 2.02 quadrillion.
The new tax revenue target set in November is in line with the government’s projection in July expecting much higher revenue collection this year at Rp 2.11 trillion.
The increase set in the regulation is attributed to income taxes that were increased by 12 percent to Rp 1.04 quadrillion in the revised budget, contributed to from across all categories, such as corporate, employee and oil and gas.
Meanwhile, the targets for value-added tax (VAT) and luxury tax were lowered to Rp 731 trillion, 1.4 percent lower than the previous figure.
The government also revised its excise revenue target down by 7.34 percent to Rp 227 trillion.
This cut was caused by much lower revenue targets in tobacco and alcoholic beverage excise as well as the government’s decision to nullify both its plastic products and sugary drinks excise targets.
Previously, the government had set a target of collecting Rp 980 billion from plastic products and Rp 3.08 trillion from sugary drinks excise revenue.
The new revision sets the nontax revenue target at Rp 515.8 trillion, a 16.7 percent increase from Rp 441 trillion in the previous regulation, as it banks on higher revenue from natural resources and state-owned enterprises (SOEs).
Revenue from coal and mineral resources is set to double to Rp 109 trillion, while the revenue target from SOE dividends was ramped up from Rp 49.1 trillion to Rp 81.53 trillion in the new regulation.
Following this higher revenue, the government is set to hike spending on education, as its figure is tied to a fixed percentage in the state budget.
Central government spending for education is set to rise by over 0.32 percent to Rp 624.25 trillion from Rp 612.23 trillion slated in the previous figure.
The government has also decided to cut its debt issuance target this year by nearly 40 percent to Rp 421.21 trillion from Rp 696.31 trillion, following a sharp decline in government bonds (SBN) issuance.
In exchange for much lower debt, the government increased financing from unused budget (SAL) by more than 222 percent to Rp 226 trillion from previously set at Rp 70 trillion.