Redefining Independence Through Taxation
On the eve of Indonesia’s 80th Independence Day, President Prabowo Subianto delivered the Financial Note on the 2026 State Budget before members of the House of Representatives and the People’s Consultative Assembly. He announced that state revenue in 2026 is projected to reach IDR 3,147 trillion, a 9.8% increase compared to the 2025 State Budget.
Breaking down the figures, the 2026 State Budget projects tax revenue of IDR 2,692 trillion and non-tax revenue of IDR 455 trillion. Compared to the previous year, tax revenue is expected to grow by 13.5% alone. This is a sharp rise given that, on average, tax revenue growth over the past decade has stood at just 7.76% (CNBC, 2025). The full breakdown of state revenue and expenditure for the past six years is shown in the following table:
Based on this data, both the target and actual state revenue from 2021 to 2026 have consistently increased. The share of tax revenue within total state revenue has also steadily increased, with the 2026 State Budget Bill setting the tax contribution target at 85.54%.
As fiscal instruments, taxes serve not only as regulators of economic activity (regulerend function), but also as the primary source of government funding (budgetair function).
However, raising revenue targets without ensuring transparency and accountability in how those funds are used risks undermining the values of independence envisioned by the nation’s founders. The Preamble to the 1945 Constitution states that the purpose of the Republic of Indonesia is to protect its people, safeguard independence, promote public welfare, advance education, and contribute to global peace and order.
Moreover, the growing number and variety of taxes imposed on the same taxpayers suggest that true tax independence has not yet been achieved. In principle, independence from a taxation standpoint would mean reducing reliance on tax revenue as other sources of income are developed. It is worth noting that, beginning in 2026, dividends from state-owned enterprises will no longer be counted as state revenue, as they will be redirected into Danantara’s revenue structure.
With this in mind, if Indonesians are to experience the true meaning of independence, particularly in taxation, the government must take several steps. First, they should enhance the quality of financial accountability reports presented to taxpayers. While the Central Government Financial Report has already been published as an accountability measure, its content and technical language make it difficult for the general public to fully understand. Therefore, the government needs to issue clear and transparent reports to taxpayers on how their contributions are utilized.
Second, the government must improve the quality of public services. Raising tax targets without a corresponding improvement in public services risks turning tax compliance into an obligation rather than a voluntary civic duty. This, in turn, erodes public trust and weakens compliance.
Finally, the government needs to be more innovative in managing natural resources and investments. By optimizing domestic resource mobilization, the government can leverage revenue collection without excessively burdening the public with new taxes and levies.
