Regressive Impact Analysis of the 12% VAT Policy on the Structure of Indonesian Household Consumption

Abstract

This study aims to analyze the regressive impact of the 12% Value Added Tax (VAT) policy on household consumption structure in Indonesia. VAT, as a consumption-based tax, is often considered regressive because it places a relatively higher burden on low-income households. This research uses a descriptive qualitative approach through literature review and secondary data analysis from previous studies and official statistics. The results indicate that the increase in VAT leads to a decline in purchasing power, particularly among lower-income groups, and causes shifts in consumption patterns from secondary to primary goods. Furthermore, the policy potentially exacerbates economic inequality due to unequal tax burden distribution. This study contributes by providing a more comprehensive understanding of how VAT policy affects household consumption structure and highlights the importance of equitable fiscal policy design