Their hopes in consumption (sector) are enormous, but these aspirations need to be financed by the stateJakarta (ANTARA) - State revenues related to education, health, and infrastructure should be stepped up to meet the needs of the middle class, Deputy Finance Minister Suahasil Nazara stated.
"Their hopes in consumption (sector) are enormous, but these aspirations need to be financed by the state," Nazara affirmed during an online public dialog here on Thursday.
He noted that infrastructure and matters related to human resources should be funded by the state budget.
According to Nazara, in the last two decades, the percentage of those from the middle class had risen, from 41 to 47 percent.
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He remarked that the percentage of the upper-middle class had also increased even more, from seven to 22 percent of the total population of Indonesia.
Meanwhile, during the same period, he highlighted that the percentage of poor and vulnerable groups plunged, from 50 percent to some 30 percent.
"If the middle class rises rapidly, then the economic characteristics will emerge, one of which is the middle-class consumption growing extraordinarily, so they contribute 56 percent to the GDP (gross domestic product)," he expounded.
According to Nazara, the government should ramp up state revenues to meet the expectations or demands of the middle class by providing various public facilities that are financed by the state.
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To increase state revenue, he suggested that the state should build a fairer, healthier, effective, and accountable tax system through the issuance of the Tax Regulation Harmonization Act (HPP Law).
"We are optimistic that the state budget would have a good tax base and would do its job to perform the allocation function, especially for public goods, income redistribution, and economic stability," Nazara noted.
He stated that the government still had to reform the financial sector in addition to fiscal reform that included tax reform.
These reforms are deemed necessary to accelerate the national economic recovery after the impact of the COVID-19 pandemic, he added.
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Translator: Sanya S, Kenzu T
Editor: Fardah Assegaf
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