The Center of Reform on Economics (CORE) Indonesia has emphasized that the upcoming administration of President Prabowo Subianto and Vice President Gibran Rakabuming Raka should focus on maximizing tax collection from underutilized sectors, particularly the entertainment industry.
CORE’s Executive Director, Mohammad Faisal, pointed out that rather than increasing taxes on manufacturing or consumption sectors—especially in light of declining purchasing power and a decrease in the Manufacturing Purchasing Managers’ Index (PMI)—the government should target sectors that have not been fully taxed. This includes entertainment taxes, as well as taxes from affluent individuals and large multinational corporations operating in Indonesia.
Faisal highlighted that the new administration should pursue tax reforms as outlined in their “Asta Cita” document, aiming for both extensification and intensification to boost business competitiveness and investment in the real sector.
In addition to entertainment, Faisal recommended optimizing tax collection from the digital economy, which is considered lucrative. He cautioned against imposing additional burdens on sectors currently struggling, as this could backfire and harm the economy.
The “Asta Cita” document also indicates a strong commitment to the book industry, proposing to eliminate VAT on all books and implement a final tax on book royalties. Faisal welcomed these tax relaxations but stressed the need for similar measures for labor-intensive industries like textiles and footwear. He suggested reducing VAT rather than eliminating it entirely, and considering reductions in other tax burdens.
By focusing on these strategies, the Prabowo-Gibran administration can create a more balanced and sustainable tax system that supports economic growth and revitalization.
The Center of Reform on Economics (CORE) Indonesia has urged the incoming administration of President Prabowo Subianto and Vice President Gibran Rakabuming Raka to focus on enhancing tax collection from sectors that have not been fully tapped, especially the entertainment industry.
Mohammad Faisal, Executive Director of CORE, highlighted the importance of not increasing taxes on the manufacturing or consumption sectors, given the current challenges of declining purchasing power and a drop in the Purchasing Managers’ Index (PMI) for manufacturing. Instead, he suggested that the government should target sectors like entertainment, higher-income individuals, and large multinational companies operating in Indonesia.
Faisal emphasized the need for the new administration to implement tax reforms as outlined in their “Asta Cita” document, which aims to stimulate business competitiveness and investment in the real sector through extensification and intensification of tax policies.
Moreover, he pointed out that optimizing tax collection from the digital economy is also essential, as it presents significant opportunities. He cautioned against burdening sectors already facing difficulties, as this could have adverse effects on the overall economy.
The “Asta Cita” document also expresses a commitment to support the book industry by proposing to eliminate VAT on all types of books and to establish a final tax on book royalties. While Faisal welcomed these plans, he stressed the importance of extending similar tax relaxations to labor-intensive industries, such as textiles and footwear, suggesting reductions rather than outright eliminations of taxes.
By prioritizing these strategies, the Prabowo-Gibran administration can foster a more balanced and effective tax system that not only supports economic growth but also enhances the overall welfare of the nation.
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