UNAIR NEWS – Indonesia’s Ministry of Finance plans to raise its 2026 tax revenue target to Rp2,357.7 trillion, a 13.5 percent increase from the 2025 target of Rp2,076.9 trillion.
Professor Rossanto Dwi Handoyo, SE, M.Si., Ph.D., from Universitas Airlangga’s Faculty of Economics and Business (FEB), cautioned against the risks of this plan. “If the revenue target is not met while spending stays on track, the question is: where will the shortfall come from?” he said.
Need for caution
He explained that lower-than-expected revenue would leave the government with two options: borrow more or cut spending toward the end of the fiscal year. “The problem is, the end of the year is usually when government projects must be completed,” he added.
Prof. Handoyo stressed the need for efficient and well-targeted government spending. Programs that directly support citizens—such as energy subsidies and welfare initiatives—should continue and undergo regular review. Such efforts, he said, are vital for sustaining household consumption, which drives about 60 percent of the national economy.
Yet, he pointed out, the government has recently reduced transfers to regional administrations. As a result, some local governments have raised taxes, including property taxes (PBB) in Pati and Bone. “Higher property taxes will only add more pressure on household purchasing power,” he warned.
Policy priorities
Prof. Handoyo urged the government to identify unproductive spending and redirect funds to more strategic needs. Personnel expenditures, he said, should focus on essential policies that benefit the public. “The government must reprioritize, including reviewing the MBG,” he noted.
He criticized the large MBG budget, arguing that reallocating part of it to healthcare would help BPJS users and boost public productivity.
According to Prof. Handoyo, policies like MBG often serve as “lighthouse projects”—high-profile initiatives that are more symbolic than practical. He argued the government should reassess which sectors deserve priority, rather than focusing solely on campaign promises.
Author: Afifah Alfina
Editor: Yulia Rohmawati
