Economist Faisal Basri Reveals Weak Tax Revenue from Mining Sector

TEMPO.CO, Jakarta - University of Indonesia (UI)’s senior economist Faisal Basri on Monday said a number of business sectors in Indonesia had caused the country’s tax revenue to drop, mainly in the mining sector, which had yet to be optimized from year-to-year. 

“The tax revenue perforated from mining [and] from smelters,” said Faisal Basri in a virtual discussion with AJI on Monday, January 25.

He cited last year’s tax revenue contribution from the mining sector that only amounted to 4.3 percent, or a mere 6.6 percent from the entire GDP. This is lower than Indonesia’s tax revenue from the transportation sector that scored 4.7 percent. 

Faisal Basri argued that the weak tax revenue from the mining sector was due to the number of leniencies that the government had granted to the industry. Based on the data from the Finance Ministry, Indonesia’s 2020 tax realization was Rp 1,070 trillion or 89.3 percent from the initial target, meaning there was a shortfall of Rp128.8 trillion.

The UI economist also called on the government to focus on the construction sector’s tax revenue that scored a tax coefficient of 0.48 (13.6 percent) towards the GDP. 

“There must be an economic and taxation transformation. This is the basic weakness within our nation that failed to increase taxes and made us dependent on the cigarette tax,” Faisal Basri said.

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FRANCISCA CHRISTY ROSANA