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Government Raises 2026 State Budget Deficit, Prepares Inheritance Tax and Reviews Tobacco Excise

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Friday, September 19, 2025 | 14:06 WIB
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Government Raises 2026 State Budget Deficit, Prepares Inheritance Tax and Reviews Tobacco Excise
Indonesia’s economic and fiscal landscape is becoming increasingly dynamic, marked by a series of policy decisions that are reshaping market expectations. Public attention is now focused on several key issues, ranging from monetary policy and potential foreign capital inflows to strategic tax initiatives and their fiscal implications.


The Indonesian government has taken strategic steps in both monetary and fiscal policy to stimulate economic growth. Bank Indonesia (BI) and the U.S. Federal Reserve simultaneously cut interest rates, a move expected to strengthen foreign capital inflows into Indonesia. These inflows are anticipated to help stabilize the rupiah and support economic growth.


On the fiscal side, the government raised the 2026 State Budget (APBN) deficit target to 2.68% of GDP, driven by higher priority spending. To optimize state revenue, the government is considering the introduction of an inheritance tax as a new instrument. Meanwhile, the tobacco excise policy for 2026 has yet to be decided and will depend on a comprehensive review, weighing economic, industrial, and public health considerations.


These measures highlight the government’s efforts to balance rising expenditure needs with the search for new revenue sources. However, the prospect of an inheritance tax has sparked public debate, underscoring the need for careful communication in crafting fair and effective fiscal policies.

Recent policy dynamics underscore the close interconnection between fiscal and monetary instruments. BI’s rate cut signals a stimulative push for the economy, while the outlook for foreign capital inflows adds supportive momentum. On the fiscal side, however, challenges loom large: the higher 2026 deficit reflects growing spending needs that must be matched with sufficient revenue streams.
Discussions around an inheritance tax, as well as potential loopholes in the Final Income Tax scheme for MSMEs, suggest that the government must design tax policies that are both fair and effective—without triggering social unrest or eroding the revenue base.

These developments reaffirm the complexity of managing Indonesia’s national economy. While monetary policy sends a positive signal, fiscal pressures remain significant. The government must balance rising state spending with sustainable tax strategies, while closing loopholes that could allow tax avoidance. The ultimate measure of success will depend on the administration’s ability to integrate fiscal and monetary policies that remain adaptive to global challenges yet rooted in fairness and effectiveness at home.



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