Indonesia Holds Off New Taxes Until Purchasing Power Recovers
Indonesia Holds Off New Taxes Until Purchasing Power Recovers
22 Apr 2026 16:00 WIB
Voice of Indonesia
Key Points
The government is delaying new taxes or rate hikes until economic conditions and household purchasing power show clear improvement, to avoid disrupting recovery.
Despite tax revenues rising 20.7 percent year-on-year by March 2026, proposals such as VAT on toll roads remain under review and will undergo further analysis before any decision is made.
RRI.CO.ID, Jakarta - Indonesian Finance Minister Purbaya Yudhi Sadewa has confirmed that the government will not introduce new taxes or raise existing rates until there is clear evidence that household purchasing power has recovered. The stance reflects concern that premature tax changes could undermine the fragile momentum of economic recovery.
He said that restoring purchasing power is one of the main considerations in determining whether new tax policies are necessary. “My promise remains the same. It hasn’t changed. Before there is a significant improvement in purchasing power or the economy, we will not implement new taxes or increase existing tax rates,” Minister Purbaya said after attending the 2026 PT SMI Symposium in Jakarta on Wednesday, April 22, as quoted by Antara.
Rather than focusing on new tax instruments, the government is monitoring key indicators such as economic growth and consumer confidence. While a 6 percent growth rate has often been cited as a benchmark, the minister indicated that approaching that level, rather than strictly achieving it, would already signal sufficient improvement.
This cautious approach comes even as state revenues show strong gains. As of the end of March 2026, tax receipts reached IDR 394.8 trillion, marking a 20.7 percent year-on-year increase.
The figures suggest that revenue collection is improving without the need for immediate policy changes, reinforcing the government’s decision to avoid additional burdens on the public.
At the same time, internal discussions about expanding the tax base continue. One proposal drawing attention is the potential imposition of value-added tax (VAT) on toll roads.
However, Minister Purbaya stressed that no decision will be rushed, emphasizing the need for thorough analysis by the Directorate General of Economic and Fiscal Strategy before any policy is finalized.
The deliberation over toll road VAT highlights a broader balancing act: increasing state revenue while maintaining economic resilience. For now, the government appears to be leaning toward restraint, ensuring that fiscal measures do not outpace the public’s ability to absorb them. ***
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