Economists Urge Government to Delay Groundwater Tax Increase

JAKARTA, KOMPAS.com - Economists believe the government needs to keep the business climate conducive amid global economic pressures, especially due to conflicts in the Middle East. One highlighted step is to delay policies that could add burdens to industry, such as the increase in groundwater tax (PAT) rates. Economist from the National Education University (Undiknas), Prof. Ida Bagus Raka Suardana, stated that currently almost all industrial sectors in Indonesia are facing heavy pressures. “In such conditions, the government should introduce policies that support industry, not add burdens like a significant groundwater tax increase,” he said, quoted on Tuesday (21/4/2026). He emphasised the importance of the government’s sensitivity to the situation faced by business actors. According to him, industry actually needs incentives to lighten operational burdens, not additional fiscal pressures. “Moreover, the groundwater tax increase is implemented all at once with a large value. If it must be applied, it should be done gradually and adjusted to the industry’s conditions,” he added. “This needs to be watched. If people’s purchasing power also declines, economic growth will also be pressured,” he said. He encouraged the government to review the policy again by involving cross-agency coordination and considering real field conditions. A similar view was expressed by the Executive Director of the Institute for Development of Economics and Finance (INDEF), Tauhid Ahmad. He assessed that the PAT increase does indeed have the potential to boost regional tax revenues, but its subsequent effects could be counterproductive. According to Tauhid, a significant tax increase will almost certainly be passed on to consumers in the form of price hikes. This condition risks suppressing demand and disrupting industry sales targets. He suggested that the government conduct dialogues with business actors before setting the policy. “If it must increase, the amount that is still affordable for industry needs to be discussed, and it should be done gradually,” he stressed.