KOMPAS.com — Civil Society Coalition Urges Purbaya Yudhi Sadewa to Push for Comprehensive Tax Reform
The Civil Society Coalition under the Forum Pajak Berkeadilan Indonesia (FPBI) has called on newly appointed Finance Minister Purbaya Yudhi Sadewa to immediately pursue comprehensive tax reforms.
According to FPBI, the Indonesian government has yet to address fundamental problems in its taxation system and continues to manage the state budget (APBN) in a disorderly manner.
They noted that Indonesia’s fiscal space has shown no significant improvement, with the tax-to-GDP ratio stagnating at around 10–11 percent—far below the Asian average.
Meanwhile, central government spending continues to surge, projected to reach Rp 3,786 trillion in the 2026 draft state budget (RAPBN).
A third of this spending, FPBI said, is allocated to populist priority programs such as Free Nutritious Meals, Koperasi Merah Putih, and energy subsidies—whose benefits have yet to be widely felt by the public.
As a result, Indonesia’s reliance on debt is rising sharply, with government borrowing projected to hit Rp 781.6 trillion in the 2026 RAPBN.
Ironically, amid a wave of mass layoffs, the government has been aggressively raising taxes, including hiking the Value-Added Tax (VAT) to 12 percent and Property Tax (PBB) rates by two to three times.
The tax burden on the informal sector also remains high—reaching 59.40 percent as of February 2025—while the Core Tax Administration System (CTAS) has yet to be fully implemented.
At the same time, rampant tax avoidance by multinational corporations continues to cost Indonesia billions of rupiah in lost revenue each year.
The country’s tax ratio also dropped to 8.42 percent in the first half of 2025, down from 9.49 percent during the same period last year.
FPBI urged Purbaya to adopt three key strategies to reduce inequality between the ultra-rich and ordinary citizens.
First, impose a wealth tax, inheritance tax, and other progressive tax instruments on the ultra-rich and large corporations.
Second, end tax amnesty, tax allowance schemes, and other tax incentives. Instead, redirect such incentives toward fostering a care-based economy, with policies that empower women and other vulnerable groups to become active economic players.
Third, push for the establishment of a global UN Tax Convention to eliminate all forms of tax avoidance.
FPBI also called on Purbaya to ensure fiscal justice between central and regional governments by reversing cuts to regional transfers (TKD) and ensuring local governments have sufficient fiscal capacity to deliver equitable public services.
In addition, FPBI said Purbaya should shift budget allocations away from extractive-focused programs toward initiatives that promote social, economic, and ecological sustainability.
They emphasized that environmental protection and restoration should be treated as long-term investments, supported by adequate and measurable budget allocations.
“(Purbaya must) reinvest the proceeds of extractive activities into environmental restoration and the protection of remaining biodiversity,” FPBI stated in a written release on Wednesday (Sept 10, 2025).
Separately, FPBI said Purbaya must take two key steps to restore public trust in the tax system.
First, ensure transparency in tax policy and strengthen civil society participation in tax policy-making and evaluation.
Second, crack down on corruption, tax evasion, and tax avoidance by multinational corporations—which cost the state significant revenue—by enforcing the Automatic Exchange of Information (AEOI), Beneficial Ownership (BO), and Country-by-Country Reporting mechanisms.
FPBI also urged Purbaya to direct tax revenues toward funding people-centered priority sectors that can reduce inequality and support ecological justice, including education, healthcare, social protection, care economy, energy transition, and efforts to promote decent work in Indonesia.
Source: Kompas