Jakarta (Antara) – Finance Minister Sri Mulyani Indrawati stated that the regulation for imposing one tariff tax (flat tax) is not relevant to the needs of Indonesia.
In the 2025 economic update in Jakarta, Wednesday, Sri Mulyani explained that the Indonesian tax system was designed to have a distribution function. That is, tax instruments are encouraged to guarantee justice in the distribution of burdens and development benefits.
In the context of tax absorption, Indonesia applies a progressive tariff system for individual income tax (PPH), where five layers of rates (5 percent, 15 percent, 25 percent, 30 percent and 35 percent) are according to the level of income groups.
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“The income is above RP5 billion a year with income under rp. 60 million a year, the rate must be different. That is the principle of justice, distribution,” said Sri Mulyani.
For corporate tax rates, the Indonesian government has set a relatively lower rate compared to worldwide, which is 22 percent. While worldwide rates are generally a rate of 30 percent to 50 percent applicable.
From this absorption, the government distributed government spending to help the poor group gain access to education, health and others.
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“It is impossible for people who don’t go to school to compete with people who go to school Ivy League. It is impossible for children whose baby is not immunization or nutrition is missing, perfect and honest compete with those whose babies are well nutritious. That is where the tax tool appears, “said Sri Mulyani.
In the same activity, the economist of the United States (US) Arthur Laffer suggested the scheme flat load With a low rate of a broad tax base (Low speed, wide flat load).
According to him, the tax system must be encouraged not to discriminate a group. Flat load Also considered neutral and can considerably increase the income from the state.
Reporter: Imamatul Silfia
Editor: Zaenal Abidin
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