Purbaya does not intend to cut tax incentives before the economy is really strong

JAKARTA - Finance Minister Purbaya Yudhi Sadewa admitted that he did not intend to cut tax incentives, even though the value of tax spending continued to increase, before the economy showed a stable strengthening.

Tax expenditures in the 2026 fiscal year are set at IDR 563.6 trillion, an increase compared to the 2025 realization of IDR 530.3 trillion.

"The effectiveness of tax spending of Rp300 trillion, Rp400 trillion, Rp500 trillion from time to time continues to increase, indeed for now we will not reduce it. We let it be like now until the economy is really strong in its growth," said Purbaya in a Working Meeting with Commission XI of the Indonesian House of Representatives in Jakarta, quoted by Antara, Thursday, February 5.

Purbaya said tax spending was still needed as part of policy support to maintain the momentum of recovery.

However, he continued, the impact of tax spending is difficult to calculate separately, given that tax incentives are also carried out simultaneously with various other incentives. For example, the government also channeled additional stimulus in the fourth quarter of last year and continued in early 2025.

Even so, he assessed that the combination of tax spending and other stimuli had helped maintain economic activity and improve the direction of the economy.

He compared the current situation with the more depressed situation in the August-September period, when the risk of a slowdown was judged to be higher.

"The success of the government and cooperation with the DPR to continue to carry out stimulus in the economy has managed to reverse the economy towards a real economy," he said.

For your information, the government has allocated a tax expenditure of IDR 530.3 trillion in 2025 which is intended to support people's purchasing power and the competitiveness of business actors.

The majority of tax spending is channeled in the form of Value Added Tax (PPN) and Income Tax (PPh) incentives.

For example, tax spending is used for the exemption of 77.3 trillion rupiah worth of food materials VAT, education sector incentives worth 25.3 trillion rupiah, transportation sector 39.7 trillion rupiah, health sector 15.1 trillion rupiah, and incentives to support micro, small, and medium enterprises (MSMEs) of 96.4 trillion rupiah.

In addition, tax spending is also used to provide tax holidays and tax allowances as an effort to encourage investment with a value of IDR 7.1 trillion.

When viewed in terms of the distribution of beneficiaries, the Ministry of Finance noted that the household group was the largest beneficiary (55.2 percent) with a value of Rp. 292.7 trillion.

Followed by MSMEs (18.2 percent) worth Rp96.4 trillion, investment climate (15.9 percent) Rp84.3 trillion, and the business world (10.7 percent) Rp56.9 trillion.