Structural Reform Is Needed To Boost People's Purchasing Power

People's purchasing power (Photo: Antara)

JAKARTA - Senior Economist of the Institute for Development of Economics and Finance (Indef) Didik J Rachbini said that currently people's purchasing power has decreased and the 5 percent economic growth target is not sufficient to restore this purchasing power, so structural reform is needed.

"So there must be a strategic reform effort so that the economic growth rate is higher than, which is targeted at 5.2 percent by 2025. This is necessary so that there is more room to support the increase in tax revenue," he explained in his statement, quoted on Tuesday, August 20.

However, Didik said that if people's purchasing power weakens or there is a high inflationary pressure, then people's ability to pay taxes can be affected. So that the Government will now work hard to maintain a balance between tax collection and not burden the community's economy.

According to Didik, in terms of tax revenues and maintaining good economic momentum, internal factors from the ministry of finance and the directorate general of taxes to the market will be very decisive.

"The ability of the Ministry of Finance and at the same time who is the minister will be a critical factor. Tax reform absolutely needs to be continued, including digitization and expansion of the tax base," he said.

According to Didik, what sectors should be explored, namely the industrial sector (non-oil and gas), including services, as the main pole. But this sector has slumped and grew low and has stagnated for years because there has been no touch of policy.

In addition, Didik said that if the growth of the sector could grow at the level of 8 percent to 10 percent, then tax collection would get free space.

Furthermore, according to Didik, the new sector that must be explored is none other than the digital economy and the creative economy, including the neglected sector, namely tourism.

"With the development of e-commerce, fintech, and digital-based services, this sector is a great opportunity to increase tax revenues through the imposition of taxes on digital platforms and online transactions," he said.