Indonesia is currently introducing a new tax rise from 11% to 12% effective in 1 January 2025. I personally disagree with the new policy due to several reasons.
First, Indonesia is currently facing a huge unemployment rate. There has been massive layouts since September 2024, with more than 80% of the unemployment unable to find new jobs until now. Since these percentage of citizens does not receive any more salary, they will be unable to afford goods and services, therefore the purchasing ability will decrease. Decrease in purchasing ability means slower economic growth due to people having second thoughts on buying. The financial burden has people, especially those who were laid off by their respective companies to carefully plan their monthly budget. They will spend less on everything, which is not good for the economy.
In addition, the Ministry of Finance has been proven to be less transparent when it comes to their activities and budgeting. The lavish lifestyle of Finance Ministry’s employees, especially those with senior roles within the department has been the subject of highlight, from their excessive personal wealth and extravagant hobbies, from hundreds of millions motorbikes to lavish overseas trip. Their ability to control and manage the nation’s finances has made them prone to corruption. Recent corruption cases has been investigated and most of them were from Ministry of Finance. The recent news and their fancy lifestyle has created a massive public distrust towards the ministry, and any policies that are controversial has angered the public.
Furthermore, many policy makers and observers cited that the country should search for more source of income, rather on relying on tax. As a nation blessed with enormous supply of natural resources, they think that the government should consider using them to add more revenue that can benefit the nation. Natural resources from oil, gas, and sea can be considered as an alternative from raising the tax level.
Lastly, this should not be a one-sided decision. I recommend that the government should do more studies before raising the new tax level. This decision does not reflect the government’s vision to prosper its citizens, where the disadvantages outweighs the advantages.