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Potential State Revenue from Indonesia's Agricultural Sector And Potential State Revenues from the Natural Resources Sector and its Problems: Agricultural Sector Tubagus Insan Book 3 of 5 Potential State Revenues from the Natural Resources Sector and its BookProblems 3. Agricultural Sector Author: Anggita Clara Shinta Editor: Produced By: Perkumpulan Inisiatif and the National Secretariat of FITRA Supported By: International Budget Partnership (IBP) and The Ford Foundation 2017 1 Book 3 of 5 Potential State Revenues from the Natural Resources Sector and its Problems Book 3. Agricultural Sector Instruments written in this book are part of the PROMOTING EQUITY ON THE REVENUE MOBILIZATION OF NATURAL RESOURCES IN FORESTRY, AGRICULTURE, PLANTATION, MARINE AND FISHERIES IN INDONESIA program. (Initial Action) Published by: Perkumpulan Inisiatif and the National Secretariat of FITRA Supported by: International Budget Partnership (IBP) and The Ford Foundation 2017 Statement Findings and instruments written in this book are private in nature, and may only be used for internal consumption, and not for the consumption of the public. This book cannot be reproduced without the consent of the publisher and/or author. 2 Foreword Economic development requires a substantial tax base. Until now, the exploitation of natural resources, specifically revenue from nonrenewable sources such as mining, oil, and gas, serves as a major source of state revenue. At the same time, state revenues from the exploitation of relatively renewable natural sources including agriculture, plantations, forestry, and fisheries have received less attention and their revenue potential has not been maximized. This book is one of the reports documenting the efforts made by civil society groups to (1) estimate the revenue generating potential of natural resources; (2) describe the governance in the sectors studied; and (3) identify the reasons for low revenue collections in the agriculture, plantation, forestry, and fishery and marine sectors. The report is designed to increase society can help contribute to increasing revenue collections from these four sectors. understanding of the sectors’ potential, governance, and revenue issues so that in the future civil This book is the third of five books, and is divided into two parts. First, an introduction, and second, the findings of the study. 3 Table of Contents Foreword................................................................................................................................................ 3 Daftar Isi ................................................................................................................................................. 4 1. Introduction to the Sector ................................................................................................................. 6 1.1. Condition of State Revenues and the Contribution of the Agricultural Sector ...................... 6 1.2. Policies To Increase State Revenue In The Agricultural Sector .............................................. 6 1.3. Structure of Presentation ........................................................................................................... 8 2. Potential Losses of State Revenue from the Agricultural Sector ................................................... 9 2.1. Lampung Province ...................................................................................................................... 9 Tax Violations and Losses in State Revenue ................................................................................. 10 Tax Evasion .................................................................................................................................... 13 Modes ........................................................................................................................................... 13 2.2. West Java Province ................................................................................................................... 14 Tax Violations ................................................................................................................................ 15 Crops ............................................................................................................................................. 18 Holticultural Crops ........................................................................................................................ 19 Tax Evation .................................................................................................................................... 20 Modes ........................................................................................................................................... 21 Corruption : ...................................................................................... Error! Bookmark not defined. 2.3. Central Java Province ............................................................................................................... 22 Tax Violations and Losses in State Revenue ................................................................................. 22 Tax Evasion .................................................................................................................................... 24 Income Tax and Value-added Tax: ................................................................................................ 24 Modes of Corruption ..................................................................................................................... 25 2.4. East Java Province .................................................................................................................... 25 Tax Violations and Losses in State Revenue ................................................................................. 26 Tax Evasion .................................................................................................................................... 27 Modes of Corruption ..................................................................................................................... 27 2.5. West Nusa Tenggara Province ................................................................................................. 27 Tax Violations and Losses .............................................................................................................. 28 Tax Evasion .................................................................................................................................... 30 4 Modes of Corruption ..................................................................................................................... 32 2.6. East Kalimantan Province ........................................................................................................ 32 Tax Violations and Losses in Revenue ........................................................................................... 32 Tax Evasion .................................................................................................................................... 34 Modes of Corruption ..................................................................................................................... 35 2.7. South Sulawesi Province .......................................................................................................... 35 Tax Violations and Losses in Revenue ........................................................................................... 36 2.8. Central Sulawesi Province ....................................................................................................... 36 Tax Evasion .................................................................................................................................... 37 Modes of Corruption ..................................................................................................................... 37 2.9. Conclusion of Findings ............................................................................................................. 37 5 1. Introduction to the Sector The vast majority of Indonesians rely on the exploitation of natural resources for their livelihoods. .8% of state revenues originated from the non-oil/gas natural resource sectors, with 0.4 % generated from non-tax sourcesBased on and Perkumpulan 7.4% generated Inisiatif’s by taxes. study of 2014 state revenues, only 7 The forestry sector contributed 0.3%, the fishery sector contributed 0.02%, and the agriculture and plantation sectors contributed 7.5% of state revenues. In relation to the Gross Regional Domestic Product (GRDP), state revenues from non-gas/oil natural resource sectors are minimal in compared to those from other sectors, as well as in comparison to the share of land accounted for by these sectors. The results of this study examine the amount of potential revenues (tax and non-tax) that could be generated by the agricultural sector, from either privately or state-owned enterprises with an area exceeding 25 ha. In addition, this study describes the issues that bring about losses in state revenue. This study was conducted in 7 regencies: Kendal Regency (East Java), Bojonegoro Regency (Central Java), Donggala Regency (Central Sulawesi), Balukumba Regency (South Sulawesi), Central Lombok Regency (East Nusa Tenggara), Kutai Kartanegara Regency (East Kalimantan), and Lampung Regency. The selection of these seven regencies was based on their heterogenous characteristics and the types of production in those regencies in hopes of representing Indonesia as a whole.
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