35
1
1
2
3
4
5
6
7
8
9
General government expenditure, % of GDP
General government revenue, % of GDP
Log GDP per capita Log GDP per capita
PPT Title
Source: World Bank staff estimates from Susenas, March round
Impact of fiscal policy on poverty and inequality in Indonesia (Percentage points / Gini points)
-3.0-2.9
-1.6
-3.4-4
-3
-2
-1
0
Impact on poverty rate Impact on Gini coefficient
2012 2017
14
15
16
17
12
14
16
18
20
22
24
2017 2018 2019 2020 2021 2022 2023 2024
No tax reform scenario
Pre-Covid Baseline
0
2
4
6
8
10
12
14
2017 2018 2019 2020 2021 2022 2023 2024
No tax reform scenario
Pre-Covid Baseline
21
22
23
Need tax measures now, so that post-COVID, it offsets impact of sluggish commodity price recovery and CIT rate cuts to restore tax to pre-COVID level:
• Widen the tax base
• Introduce taxes to meet environmental and health objectives
• Improve tax compliance
• See next session!0
2
4
6
8
10
12
14
2017 2018 2019 2020 2021 2022 2023 2024
Tax reform scenario
No tax reform scenario
Pre-Covid Baseline
24
Central Government explicit subsidy and estimated implicit subsidy spending (IDR trillion)
0
50
100
150
200
250
2012 2013 2014 2015 2016 2017 2018
Fuel Subsidy
Explicit subsidy
Implicit subsidy
0
20
40
60
80
100
120
2012 2013 2014 2015 2016 2017 2018 2019est
Electricity subsidyCompensation/Receivables (stock)
Electricity subsidy (budget)
25
0%
50%
100%
PBI/JKN Bansos Rastra BPNT PIP PKH
0%
50%
100%
Diesel (Solar) 450 + 900 VA (*) LPG Kerosene• Energy subsidies: a large share enjoyed by middle class and up
• Fertilizer subsidies: over 30% of subsidized fertilizer leaks to non-targeted producers, like oil palm plantations; 60% of subsidies benefit largest 40% of farmers
26
27
52%
5%
Non-metro rural
Rural periphery
Non-metro urban
Urban periphery
Metro core
NA
45%
17%
27%
2% 2%
PSU poor conditions
No electricity/clean water
Building construction
Change in employment
Poor construction quality
Lack of access
Half of all subsidized housing is located in rural areas while urban housing need is growing
…and poor quality is main reason for vacancies
28
•
•
29
•
•
30
30
2
1
30
31
32
33
34
35
