{"id":329684,"date":"2024-11-18T09:40:11","date_gmt":"2024-11-18T02:40:11","guid":{"rendered":"https:\/\/unair.ac.id\/unair-economics-professor-weighs-in-on-12-vat-increase\/"},"modified":"2024-11-18T12:50:28","modified_gmt":"2024-11-18T05:50:28","slug":"unair-economics-professor-weighs-in-on-12-vat-increase","status":"publish","type":"post","link":"https:\/\/unair.ac.id\/en\/unair-economics-professor-weighs-in-on-12-vat-increase\/","title":{"rendered":"UNAIR Economics professor weighs in on 12% VAT increase"},"content":{"rendered":"\n

UNAIR NEWS<\/strong> \u2013 The Indonesian government is set to raise Value Added Tax (VAT) to 12%, effective January 1, 2025. This policy has sparked mixed reactions among experts and the public, particularly in light of the declining middle class and weakened purchasing power in Indonesia.<\/p>\n\n

Professor Rossanto Dwi Handoyo SE, MSi, PhD, an economist from 51动漫\u2019s<\/a> Faculty of Economics and Business (FEB), shared his analysis of the policy. He pointed out that Indonesia’s economic growth remains robust, despite global challenges.<\/p>\n\n

Prof. Handoyo also noted that the nation\u2019s trade balance continues to show a surplus, indicating higher export volumes compared to imports. \u201cIn comparison with other countries, our economic growth is quite impressive. For instance, China\u2019s growth is now below 5%,\u201d he stated. <\/p>\n\n

Declining middle class and purchasing power<\/strong><\/h5>\n\n

From 2019 to 2024, Indonesia experienced a significant reduction in its middle class. Prof. Handoyo attributed this decline to the lingering effects of the COVID-19 pandemic. \u201cOur middle class has not fully recovered since COVID-19. The pandemic triggered a steep decline in this demographic,\u201d he explained. <\/p>\n\n

Regarding the weakening purchasing power, Prof. Handoyo commended the government\u2019s efforts to maintain stability. He highlighted Indonesia\u2019s relatively steady fuel prices, even amid global conflicts. \u201cThe government has been strategic in safeguarding purchasing power through administrative price controls,\u201d he noted.<\/p>\n\n

Addressing the deflation observed over five consecutive months, Prof. Handoyo suggested two possible factors: an oversupply of goods or reduced consumer demand. \u201cFurther analysis is needed to determine whether the issue stems more from excessive supply or a demand shortfall,\u201d he remarked.<\/p>\n\n

\"\"
Professor Rossanto Dwi Handoyo SE, MSi, PhD, from Faculty of Economics and Business (FEB), Head of Economics Department 51动漫 (UNAIR) (Photo: By courtesy)<\/figcaption><\/figure>\n\n
Economic impact of VAT hike<\/strong><\/h5>\n\n

VAT is essentially a tax imposed on producers who convert raw materials into finished products. Prof. Handoyo noted that the increase in VAT is likely to reduce household consumption while boosting the state budget (APBN). \u201cPrices will rise, but the increase should still be manageable,\u201d he explained.<\/p>\n\n

He expressed optimism that the higher APBN revenue could serve as a catalyst for economic growth through increased government spending. \u201cFor instance, building roads, airports, and ports can stimulate economic growth. However, the decline in household consumption due to the tax hike must also be addressed,\u201d he emphasized.<\/p>\n\n

Prof. Handoyo underscored the importance of effective government spending in maximizing the policy’s benefits. \u201cIt\u2019s imperative that APBN expenditures are managed effectively to benefit society. Investments in infrastructure must not go to waste\u2014ensure these projects provide tangible benefits to the communities they serve,\u201d he concluded.<\/p>\n\n

Author: Afifah Alfina<\/p>\n\n

Editor: Edwin Fatahuddin<\/p>\n","protected":false},"excerpt":{"rendered":"

UNAIR NEWS \u2013 The Indonesian government is set to raise Value Added Tax (VAT) to 12%, effective January 1, 2025. This policy has sparked mixed reactions among experts and the public, particularly in light of the declining middle class and weakened purchasing power in Indonesia. Professor Rossanto Dwi Handoyo SE, MSi, PhD, an economist from […]<\/p>\n","protected":false},"author":79,"featured_media":329571,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[48,50,4554],"tags":[14707],"class_list":["post-329684","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-experts","category-news-en-2","category-news","tag-news-en-3"],"yoast_head":"\nUNAIR Economics professor weighs in on 12% VAT increase - 51动漫 Official Website<\/title>\n<meta name=\"description\" content=\"The Indonesian government is set to raise Value Added Tax (VAT) to 12%, effective January 1, 2025.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/unair.ac.id\/en\/unair-economics-professor-weighs-in-on-12-vat-increase\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"UNAIR Economics professor weighs in on 12% VAT increase - 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