Continued to be Part I

1. Fiscal policy can help parties affected by the economic downturn, especially for SMEs. The government provides large financial assistance for industry players affected by Covid-19 so that they can carry out their operational activities and can absorb many new workers. In this case, the government can also create innovations in tax regulations that can create a new balance between the interests of consumers, entrepreneurs, the community and the government. After that, the government can raise income taxes or taxes on goods and services. Focus on revenue mobilization by carrying out tax reforms and designing new tax policy strategies.
2. Focus on revenue mobilization by carrying out tax reforms and designing new tax policy strategies.
3. Fiscal policy can encourage aggregate demand. This fiscal policy aims to influence the aggregate demand side of an economy in the short term. In addition, this policy can also affect the supply side which is more long-term in nature, through increasing economic capacity.

 
I think the characteristic of my chosen fiscal policy reform is combination of Expansionary and neutral Fiscal Policy, because Expansionary fiscal policy uses lower taxes and/or higher spending to ultimately boost prosperity and economic growth. By reducing taxes, consumers have more money in their pockets to go out, spend, and stimulate the economy. At the same time, higher govemment spending can boost aggregate demand. If it undertakes an investment project, it can create many new jobs. Jobs for people that would otherwise be unemployed. In turn, these employees will have more money to spend, thereby stimulating the economy.

 

4.  Financing. Various steps are focused on encouraging flexible, prudent and innovative financing through the Public Private Partnership (PPP) financing scheme and strengthening the role of the Sovereign Wealth Fund for the Investment Management Institution and the Special Mission Vehicle under the Ministry of Finance. In addition, the Government together with the Financial Services Authority and Bank Indonesia will continue to deepen the financial sector market and control debt prudently.

 

• What are the characteristics of the fiscal policy reform that you chose?

The second type of fiscal policy is a neutral policy, which is also known as a balanced budget. This is where the government brings in enough taxation to pay for its expenditures. In other words, government spending equals taxation. Under a neutral fiscal policy, governments are restrained on what they spend depending on what they bring in. In a similar fashion, this is what most households do. For instance, the average taxpayer is unable to spend more than they bring in — unless of course, they use credit. With a neutral fiscal policy, it is difficult to tell how much in tax will be brought in from one year to the next. So, governments often forecast tax receipts year on year and plan accordingly.