The government has not yet decided on new policies to be taken to maintain people’s purchasing power, especially the middle class. The stimulus in the form of tax incentives that are currently in effect is said to be sufficient to support public consumption and the national economy.
The tax incentive in question is the Value Added Tax Borne by the Government (PPN DTP) for the property sector. Head of the Fiscal Policy Agency of the Ministry of Finance Febrio Nathan Kacaribu assessed that the policy so far is still quite capable of supporting people’s purchasing power.
“Now there is VAT DTP for houses. We provide it for houses up to a price of IDR 5 billion, we provide incentives up to the first IDR 2 billion. We provide it from the fourth quarter of 2023 and we evaluate the results are good. It has succeeded in driving economic growth in 2023 quite significantly,” said Febrio at his office, Jakarta, Monday (6/8).
The government-borne home purchase tax is also in line with the community’s need to own a home which is still quite high. Therefore, the stimulus with 100% coverage is given until June 2024 and 50% coverage is valid from July to the end of 2024.
According to him, the stimulus has also proven to be effective, not only seen from people buying houses, but also from the construction sector which has increased due to the construction of new houses.
“If you look at it, investment in the second quarter is better, this is the result of one of the reasons why investment is dominated by buildings, around 70-75% of our investment is in the form of buildings,” explained Febrio.
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Until the end of the year, the government expects there to be strengthening on the construction side because during the first two quarters there was good growth.
“We hope that it can be sustained. So far, the total is 5.1%, in line with our expectations,” he added.
The purchasing power of the community or household consumption is known to play an important role in the economy. Data from the Central Statistics Agency (BPS) shows that the contribution of household consumption in the second quarter to Gross Domestic Product (GDP) reached 54.53%.
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At the same time, the government also ensures that government spending will remain effective and support the pace of economic growth. Febrio also ensured that government spending was in accordance with what was planned.
Therefore, according to him, there is no need for special focus or extra efforts to boost government spending in the remaining two quarters of this year. “Actually, there is nothing that needs to be boosted. Why? Because our spending for this year, if we look at the last lapsem (semester report), is around Rp87 trillion above the APBN, so there is actually nothing that needs to be boosted,” Febrio explained.
“This is spending that we have actually done well, and in some items it will even be higher than the APBN,” he added.
The government spending projected to exceed the initial estimate is related to the rupiah exchange rate. In the State Budget, the rupiah exchange rate is pegged at around Rp15 thousand against the US dollar. Meanwhile, in the mid-year projection, the rupiah is pegged at around Rp16 thousand per US dollar.
The exchange rate changes affect government spending from the subsidy and compensation side, especially those related to energy. “The thousand difference already reflects changes in spending, especially from subsidies and compensation which will increase by around Rp60-Rp70 trillion, so this is the implementation of the 2024 State Budget that we must ensure continues to run well and is a catalyst for the economy and public consumption,” concluded Febrio. (Z-11)
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