1

2
3
4
5
6
7
8
9
General government expenditure, General government revenue,
% of GDP % of GDP

Log GDP per capita Log GDP per capita

Impact of fiscal policy on poverty and inequality in Indonesia (Percentage points / Gini points)

-1

-2 -1.6

-3
-2.9
-3.0
-3.4
-4
Impact on poverty rate Impact on Gini coefficient
2012 2017

Source: World Bank staff estimates from Susenas,

March round

PPT Title
14
15
16
17
14 24

12 22
10
20
8
18
6 No tax reform scenario
No tax reform scenario 16
4 Pre-Covid Baseline
Pre-Covid Baseline 14
2

0 12
2017 2018 2019 2020 2021 2022 2023 2024 2017 2018 2019 2020 2021 2022 2023 2024
21
22
Need tax measures now, so that post-
COVID, it offsets impact of sluggish 14
commodity price recovery and CIT rate 12
cuts to restore tax to pre-COVID level:
10
• Widen the tax base
8
• Introduce taxes to meet 6
environmental and health objectives Tax reform scenario
4 No tax reform scenario
• Improve tax compliance Pre-Covid Baseline
2
• See next session!
0
2017 2018 2019 2020 2021 2022 2023 2024

23
250 120
Fuel Subsidy Electricity subsidy
100 Compensation/Receivables (stock)
200
Electricity subsidy (budget)
Explicit subsidy 80
150
Implicit subsidy 60
100
40
50 20

0 0
2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018 2019
Central Government explicit subsidy and estimated implicit subsidy spending (IDR trillion) est
24
 100%

50%

0%
• Energy subsidies: a large share Diesel (Solar) 450 + 900 VA (*) LPG Kerosene

enjoyed by middle class and up 100%

• Fertilizer subsidies: over 30% of

subsidized fertilizer leaks to non- 50%
targeted producers, like oil palm
plantations; 60% of subsidies benefit
0%
largest 40% of farmers PBI/JKN Bansos Rastra BPNT PIP PKH

25
26
Half of all subsidized housing is located in rural areas …and poor quality is main reason for vacancies
while urban housing need is growing 2% 2%
Non-metro rural
PSU poor conditions
Rural periphery
No electricity/clean water

Non-metro urban 45% Building construction

52% 27%
Urban periphery Change in employment

Metro core Poor construction quality

5% 17%
NA Lack of access

27
•

28
•

29
1

30 30

30
31
32
33
34
35