Indonesia's Purchasing Power Weakens, Tax Payments Also Fall in January 2024

February 25, 2024, 11.58 PM  | Reporter: Dendi Siswanto
Indonesia's Purchasing Power Weakens, Tax Payments Also Fall in January 2024

ILUSTRASI. Shoppers sort household needs at a shopping center, Sukabumi City, West Java, Friday (13/11/2023). The weakening purchasing power of Indonesian people due to rising food prices means that tax payments are also shrinking. PHOTOS: Antara/Henry Purba

TAX - JAKARTA. The weakening of public purchasing power has also affected tax revenue in January 2024. The Ministry of Finance (Kemenkeu) recorded tax revenue realization in January 2024 amounting to IDR 149.25 trillion. This figure is equivalent to 7.50% of the 2024 State Budget (APBN) target.

However, the realization of this tax revenue contracted by 8% year on year (YoY). In fact, in January 2023, tax revenue realization still grew by 6.4% YoY.

Executive Director of Pratama-Kreston Tax Research Institute (TRI) Prianto Budi Saptono said that domestic value-added tax (VAT DN) was the largest contributor to tax revenue in January 2024, reaching 23.9% of total tax revenue.

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However, there was a significant decrease of about 8%. This indicates that the VAT DN base in the form of domestic goods/services transactions has decreased.

"This can be seen from the increase in prices of goods needed by the public," Prianto told, Sunday (25/2).

Prianto said the decrease in VAT DN has not been offset by an increase in income tax (PPh) Article 21 in January 2024 by 5.2% from the January 2023 period.

"The increase is due to the increase in labor absorption so that the PPh 21 base automatically increases," he said. 

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This condition reflects that the absorption of labor in Indonesia is not yet optimal so the wages or income received by employees have not been able to compensate for the increase in prices of goods and services.

As a note, the realization of PPh 21 revenue in January 2024 was recorded at IDR 28.3 trillion, or an increase compared to January 2023 amounting to IDR 22.29 trillion.

On the other hand, the realization of VAT DN revenue in January 2024 was IDR 35.6 trillion, or a decrease compared to January 2024 amounting to IDR 51.41 trillion. 

Editor: Syamsul Azhar

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