Increase in Value Added Tax Rate and Post Covid- 19 Economic Recovery in Indonesia

Abstract

The hope is that implementing a value-added tax rate of 11% can help Indonesia's economic recovery post-covid-19. However, after the policy implementation, there were issues from various external and internal aspects. This article aims to explain the impact of the implementation of value-added tax rates based on the economic issues faced by Indonesia. The approach used in this article uses a literature review approach. Every implementation of a new policy, of course, will have a positive and negative impact. Regardless of the impact of the implementation of the new tax rate, the value-added tax is quite effective as a source of state revenue due to the collection system on the objects of consumption of final goods or services. How-ever, due to its short-term nature, the value-added tax is less effective when used as the main instrument for economic recovery. Economic recovery requires other instruments such as fiscal policy and cooperation from various lines and policies prioritising the community because most economic activities are in the community line.