Indonesian Government Ensures Tax Reforms Align with 17+8 Public Aspirations
By: Riky Afreza
The government has emphasized that the tax reforms currently being drafted are not only oriented toward the country’s fiscal interests, but also reflect the public aspirations embodied in the “17+8” demands from workers and businesses. In recent months, the discourse on tax reform has drawn both pros and cons, particularly due to concerns about the additional burden on the middle class and MSMEs. However, the government has stated that all steps taken will consider social justice, purchasing power protection, and legal certainty to avoid economic or social turmoil.
Finance Minister Purbaya Yudhi Sadewa stated that tax reforms will be implemented soon and there will be no tax increases in 2026. The government will prioritize increasing taxpayer compliance and improving governance to boost state revenues. The government will expand the tax base by mapping the shadow economy, or unreported activities intended to avoid taxes, improving administration, and providing taxpayer services. This policy is expected to play a role in maintaining public purchasing power, which is key to national economic recovery.
This reform measure is claimed to be an effort to modernize the tax system to make it fairer, more transparent, and more efficient. The government has highlighted that tax revenues remain heavily dependent on certain segments, while tax compliance rates are relatively low in other sectors. With an increasingly integrated database and digitized tax services, the reforms are expected to broaden the tax base without burdening vulnerable groups. The government is also opening up space for public participation by inviting input from labor unions, business associations, and academics to ensure that the policies formulated truly reflect the needs of the community.
Previously, one of the key points in the “17+8” aspirations proposed by workers was the assurance that tax reform would not be a pretext to suppress wages or reduce labor protections. The government emphasized that there are no plans to impose new taxes on the wages of low-income workers and is even designing incentives for companies that improve the welfare of their employees. This approach is described as a win-win solution strategy, where the government gains additional revenue without sacrificing basic workers’ rights. This commitment is expected to alleviate concerns among workers, who have been worried that the reforms will burden them.
Furthermore, the “17+8” aspirations also included calls for tax reforms to be directed at strengthening the MSME sector, the backbone of the national economy. The government responded by preparing a tax administration simplification scheme and expanding fiscal incentives to allow MSMEs more freedom to develop. With these measures, the government hopes to create a more conducive business climate, increase investment, and create new job opportunities. This principle of favoring the real sector is considered crucial so that tax reforms are not merely technocratic fiscal but also have a direct impact on strengthening the people’s economy.
In a global context, the government also recognizes the need for tax harmonization to ensure Indonesia remains competitive amidst the dynamics of the global economy. Several countries are implementing similar reforms to anticipate shifts in supply chains and the digitalization of the economy, ensuring Indonesia remains competitive. However, the government emphasizes that openness to foreign investment must not sacrifice national interests. Therefore, tax reforms are aimed at creating a healthy, fair, and competitive business climate without compromising protection for local workers and domestic industries.
Several academics view this government move as a crucial opportunity to improve the state revenue structure, which has historically been vulnerable to economic shocks. With a broader tax base and higher compliance, the state budget is expected to be more resilient in financing development and social protection programs. Meanwhile, the government is also encouraged to strengthen oversight mechanisms to minimize the potential for abuse of authority or corrupt practices in tax administration. Transparency and accountability are considered key to the success of this reform.
The Chairperson of the Indonesian Employers’ Association (Apindo), Shinta Kamdani, responded to the government’s statement confirming that there would be no new taxes or tax rate increases in 2026. They believe that certainty in tax policy is a crucial factor in maintaining business stability. The government’s move to maximize state revenue through increased compliance and improved tax mechanisms is considered more appropriate than adding new burdens.
