ANALYSIS OF THE IMPACT OF THE VALUE ADDED TAX INCREASE ON POVERTY
Fitrawaty, Indra Maipita, Muammar Rinaldi

Universitas Negeri Medan

Abstract

Abstract, The government will again increase the Value Added Tax (VAT) to 12 percent in 2025. The tax increase is actually aimed at increasing state revenue which is ultimately expected to be felt by the community, as well as this will have an impact on various parties, for example, it has the potential to reduce microeconomic activities, macro investment activities and decrease purchasing consumer behavior. The purpose of the study is to analyze the interdependence of tax instruments and inflation on poverty, and the effect of tax instrument shocks on poverty. Research methods starting from conducting assumption tests- Stationarity Test, Cointegration Test, Optimal Lag Length Test, Correlation Test, after passing the assumption test, new data is run, according to the data conditions to obtain a model so that the data will be run to obtain a VAR, SVAR, or VECM Model, then Shock is carried out through Impulse Response and Variace Decompositions. The results of the study showed that Taxes and Inflation have interdependence with poverty, and a one-unit tax shock resulted in a decrease in the poverty rate from period one to period ten. The government^s policy of raising taxes has succeeded in increasing people^s welfare

Keywords: Tax- Poverty- Inflation

Topic: Social Science, Linguistics, Foreign Language and Humanities