2022 State Budget: Fiscal Policy and Structural Reform
Favorable Demographic Changes As An Opportunity For Tax Reform
Increasing middle-class group could be capitalized to strengthen government revenues in the future
The share of the aspiring and middle-class group
continues to increase (%)
7,0
10,2
16,6
22,5%
Consumption of the aspiring and middle-class group
increases significantly (IDR Trillion)
350
22,5
Share of Middle Income
Population in 2018
300
increased 15.5
ppt from total
250
41,2
44,2
44,5
47,0
51,8
45,5
38,5
30,0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Poor and Vulnerable
Aspiring Middle Class
Middle Class
Upper Class
population
in 2002
Source: Workl Bank (2020)
Rp Triliun
200
150
100
50
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Poor and Vulnerable
Aspiring Middle Class
Middle Class
Through tax reforms, state revenue could be strengthened
along with favorable demographic changes.
Stronger consumption on the back of rising middle-
class group could boost tax revenue, particularly VAT
and personal income tax.
Source: Ministry of Finance
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