Adelia Pratiwi and Agrevinna Beatrice (The Jakarta Post)
Tue 29 March 2022
As of April 1, the new Value Added Tax (VAT) provisions of the Harmonized Tax Law come into effect. The implementation of the new provisions amidst the current economic dynamics has certainly generated a lot of controversy as to whether it is necessary to implement this law at this time. When it comes to the country’s fiscal management, the VAT reform could be a game-changer due to many factors.
First and foremost, VAT reform is a way to address issues of inequality and other pressing challenges such as the impact of the COVID-19 pandemic and climate change. Our Gini ratio (measure of inequality) in September 2021 stood at 0.381, higher than that of neighboring countries such as the Philippines (0.423 in 2018) but still leaving room for improvement.
There is evidence that Indonesian fiscal policy has not optimally realized its redistributive role. Compared to other countries, based on the Commitment to Equity (CEQ) website, Indonesia’s fiscal policy, both in revenue and expenditure policies, is one of the least effective in reducing income inequality in the CEQ countries studied.
read the full story
From IDR 55,000/month
- Unlimited access to our web and app content
- e-Post digital newspaper
- No ads, no interruptions
- Privileged access to our events and programs
- Subscription to our newsletters
You might also like: