Indonesia’s government and the House of Representatives have agreed to raise the state revenue target in the 2027 draft state budget to more than 12% of gross domestic product, while lawmakers called for new sources of revenue, including the long-delayed excise tax on sugar-sweetened beverages.
The agreement was reached during deliberations on the government’s Macroeconomic Framework and Fiscal Policy Principles for the 2027 fiscal year, with lawmakers seeking to strengthen the country’s fiscal position through higher tax collection and expanded customs revenue.
Fauzi Amro, deputy chairman of House Commission XI, announced the agreement Thursday while presenting the findings of the commission’s Revenue Working Committee. He said lawmakers approved an increase in the lower bound of the government’s state revenue target to 12.01% of GDP, approximately 0.19 percentage points higher than the initial scenario proposed in the macroeconomic framework.
“The working committee agreed to raise the lower limit to 12.01%, an increase of around 0.19 percentage points,” Fauzi said.
He noted that Indonesia’s Finance Ministry would make further adjustments because the higher revenue target would also affect other components of state revenue included in the 2027 budget framework.
To help meet the more ambitious target, Commission XI urged the government to maximize revenue from a planned excise tax on sugar-sweetened beverages, arguing that the measure could help offset projected shortfalls in revenue collected by the Directorate General of Customs and Excise.
“The Finance Ministry can optimize revenue from the excise tax on sugar-sweetened beverages to cover the revenue shortfall at the Directorate General of Customs and Excise,” Fauzi said.
Lawmakers also encouraged the government to intensify tobacco excise policies and adjust import duties on selected commodities. In addition, they recommended expanding the list of excisable goods and broadening the revenue base for export duties on certain commodities to strengthen government finances.
Fauzi emphasized that any expansion of excise taxes or import duties should be implemented carefully to avoid undermining household purchasing power or weakening economic growth.
“The expansion of export duty revenue should be adjusted to current economic conditions and the public’s purchasing power,” he said.
Beyond customs measures, the government plans to broaden Indonesia’s tax base by making greater use of data analytics and digital technology to capture revenue from the digital economy, the shadow economy and other informal sectors that remain outside the formal tax system.
Tax administration will also be strengthened through the continued optimization of the Coretax system and the implementation of the Compliance Risk Management Integrated Risk Engine, or CRM-IRE, to improve taxpayer compliance and enhance risk-based supervision.
Authorities are expected to tighten oversight of corporate groups, related-party transactions and high-profile individual taxpayers as part of broader efforts to reduce tax avoidance. The government also plans to reinforce tax law enforcement through a multidoor approach that combines multiple legal instruments to create a stronger deterrent against tax violations.
On the fiscal policy front, lawmakers urged the Finance Ministry to streamline tax incentives so they are better targeted at supporting sustainable economic growth, improving business competitiveness and creating a healthier investment climate.
Commission XI also requested that the Finance Ministry prepare a comprehensive roadmap for implementing Indonesia’s long-planned carbon tax, describing the measure as an important component of the country’s medium-term fiscal reform agenda.
The agreement on a higher revenue target reflects the government’s effort to strengthen fiscal resilience while maintaining budget sustainability as Indonesia seeks to finance development priorities and improve public finances in the coming years. Achieving the target, however, will depend on stronger tax compliance, broader revenue collection and the successful implementation of new fiscal measures without placing excessive pressure on businesses or consumers.
