Example of Fiscal Policy

Example of Fiscal Policy – ​​Two economic policies that have been issued by the Indonesian government are fiscal and monetary policies. Fiscal policy is a policy issued in order to keep revenue and expenditure from a country stable, so that the economy can continue to grow.

The government of a country has the right to regulate the amount of state revenue and expenditure. One way to regulate revenue is to determine the amount of tax as one of the instruments of fiscal policy.

The purpose of implementing fiscal policy is to maintain economic stability, create jobs, prevent inflation, and so on.

In this article, you will discuss fiscal policy and the differences between fiscal and monetary policies. Come on, continue to refer to the following article!

Examples of Fiscal Policy Applicable in Indonesia

There are several examples of fiscal policies that have been implemented by the Indonesian government. Among them, the first fiscal policy was when President Joko Widodo announced the Tax Amnesty program in 2017. This program was launched because there were many cases of tax arrears reports and many people did not report the amount of wealth they owned. Therefore, finally President Joko Widodo decided to implement the Tax Amnesty program.

The Tax Amnesty Program is a program for the elimination of taxes owed as well as countless criminal sanctions in the field of tax administration sanctions. With this amnesty, many political parties are competing to immediately settle tax arrears as well as many individuals who immediately report the amount of their wealth to the authorities. This program can increase Indonesia’s national income against rupiah and it is proven that national income can increase up to 15.22 trillion rupiah.

The second is the tax relaxation that will take place from 2020 to early 2021. This tax relaxation program aims to increase people’s purchasing power.

An example of the last fiscal policy is gas and fuel subsidies. The purpose of this fiscal policy in the fuel sector is to facilitate mobility and economic transactions in society.

What is Fiscal Policy

In Indonesia there are two economic policies that have been issued by the government in order to maintain the stability of the country’s economy. The two policies are fiscal policy and monetary policy.

This time we will discuss the existing fiscal policy in Indonesia. What is meant by fiscal policy?

Quoting from the Financial Services Authority (OJK), fiscal policy is a policy regarding taxes, other revenues, debts, and government spending with a specific purpose. These objectives include supporting monetary stability, economic balance, increasing economic development, and expanding employment opportunities.

In simple terms, fiscal policy is a policy issued by the government with the aim of keeping expenditure and income stable and creating a country’s economy that continues to grow.

Through fiscal policy, the government can make various adjustments to state spending and revenue in the hope of achieving development and economic stability.

In general, the government through the implementation of fiscal policy will change the amount of tax which is one of the instruments of fiscal policy and has a role as a source of state revenue to finance development.

So, if Sinaumed’s sees the construction of roads, stations, bus stops, terminals and so on, all of these developments come from state tax revenues. Fiscal policy in Indonesia is under the authority of the Fiscal Policy Agency (BKF) within the Ministry of Finance of the Republic of Indonesia.

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Fiscal Policy Objectives

The following are some of the objectives of implementing fiscal policies issued by the Indonesian government.

1. Improving the quality of Human Resources (HR)

One of the economic problems in Indonesia that still needs to be addressed is the problem of unemployment as a result of a lack of quality Human Resources (HR).

Fiscal policy is considered effective in overcoming various unemployment problems through programs to improve the quality of human resources. From holding a program to improve the quality of human resources, it is hoped that workers at productive age will already have the skills to be able to compete in the world of work.

Finally, the problem regarding the lack of quality human resources and unemployment can be overcome by implementing fiscal policy.

2. Controlling price stability

Sinaumed’s must have seen or heard news about price hikes for several commodities, especially those with essential properties. This increase in the price of goods can arise from various aspects, for example from high market demand or the occurrence of hoarding and monopoly carried out by many elements.

3. Maintain and develop the country’s economy

As explained in the previous paragraph, if fiscal policy by regulating state revenues and expenditures has the goal of keeping a country’s economy growing.

Therefore, the implementation of fiscal policy is expected to be able to bring up various new innovations and provide a positive influence on the country’s economy, so that the country’s economy can continue to grow well.

4. Realization of social justice

One of the goals of fiscal policy is to regulate state spending and revenue by realizing welfare and social protection.

One of the actions that the government has taken with the aim of realizing social justice is the enactment of the National Economic Recovery Program issued by the Ministry of Finance so that people in the middle to lower and vulnerable economic categories are able to survive the COVID-19 pandemic.

This makes the realization of social justice that can be felt by all Indonesian people.

5. Encouraging the rate of investment

The fifth goal of fiscal policy is to create a better investment climate for capital market players. One of the biggest transactions in the Indonesian economy comes from incoming investment.

With a stable economic condition as an effect of fiscal policy, it turns out that it can encourage the rate of investment from a country. The creation of trust from investors who are interested in investing their capital, so that the state will also receive even greater taxes from the many investors who enter.

Types of Fiscal Policy

Types of fiscal policy in Indonesia can be divided into two categories, namely:

1. Fiscal Policy from a Theoretical Perspective

From a theoretical point of view, the types of fiscal policy are further divided into three, namely:

1. Functional Fiscal Policy

Functional fiscal policy is a policy implemented to improve the quality of macroeconomics. The impact of the new theoretical fiscal policy can be seen in a relatively long term.

Examples of functional fiscal policies can be seen in the provision of college scholarships, start-up funding assistance , and so on.

2. Deliberate Fiscal Policy

Deliberate fiscal policy is a policy carried out by manipulating the state budget. Deliberate fiscal policy is generally implemented to deal with a problem such as an economic crisis and a pandemic.

An example of deliberate fiscal policy can be seen in the state budget allocation for the health sector during the COVID-19 pandemic.

3. Accidental Fiscal Policy

This one policy is a determination or decision to protect economic stability in the non-government sector.

2. Fiscal Policy Through Implementation Aspects

Fiscal policy through the implementation aspect is divided into 2, namely:

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1. Expansive Fiscal Policy

Expansionary fiscal policy is a policy by increasing the budget and reducing or eliminating taxes on a particular sector.

This policy is enforced when the economic conditions of a country are weak and the aim is to increase the purchasing power of goods, so that companies can continue to survive without being laid off.

2. Contractive Fiscal Policy

The opposite of expansionary fiscal policy is contractionary fiscal policy. Contractive fiscal policy is enforced by increasing the taxpayer while simultaneously reducing the government spending budget.

The implementation of expansionary fiscal policy aims to prevent inflation and reduce ratios.

Fiscal Policy Instruments

When implementing fiscal policy, there are several instruments that can be used to maintain the economic stability of a country. The following are included in the fiscal policy instruments, namely:

1. Taxes

Taxes are the most important fiscal policy instrument. From taxes, the government can realize its goals by imposing fiscal policies. The government can manipulate taxes in the form of additions, subtractions, delays, or abolition.

2. Public bonds

The second fiscal policy instrument is public bonds or also known as bonds for citizens. These notes are well known in investment.

In public bonds, the government will offer state bonds to people who have funds. Then, if people buy state debt securities, the state will repay the debt accompanied by interest on the loan.

One example is SBN Retail or State Securities which are traded. This letter is traded as an investment product. For people who buy these bonds, they will play a direct role in financing the state revenue budget.

3. Shopping expenses

In the country context, the government has the right to reduce state spending on a particular sector if the country’s balance of payments has a deficit. One way to do this is by delaying the disbursement of the Holiday Allowance for Civil Servants.

Differences between Monetary Policy and Fiscal Policy

In order to maintain the stability of the country’s economy, the government can implement two policies, namely monetary policy and fiscal policy. These two economic policies are equally important for increasing economic growth and maintaining the stability of the country.

In practice, monetary policy and fiscal policy can be applied simultaneously or just one of them. All of this hinges on the country’s need to stabilize its economy. However, these two policies have their differences.

The second difference can be seen from the objectives of implementing monetary policy and fiscal policy. The objective of monetary policy is to maintain the amount of money circulating in society. While the purpose of implementing fiscal policy is to maintain state revenues and expenditures in order to create economic stability.

Conclusion

Now, after Sinaumed’s understands about fiscal policy to the difference with monetary policy. Come on, let’s look back. Fiscal policy is an economic policy that regulates all state revenues and expenditures in order to create economic stability.

From fiscal policy it turns out to be able to encourage investment from a stable state of the country’s economy. Thus encouraging investors to invest in the country.

So, if Sinaumed’s wants to take advantage of this fiscal policy moment, Sinaumed’s can do it by investing. One of the most popular investment methods nowadays is the equity crowdfunding method .

Equity crowdfunding is a funding scheme for small businesses by means of contributions from the wider community to fund MSMEs. Through equity crowdfunding , Sinaumed’s can become a shareholder in a potentially profitable and fundable business.

Sinaumed’s can benefit from this equity crowdfunding investment method . Where Sinaumed’s will receive dividend returns from business projects that have been funded by Sinaumed’s . Apart from gaining profits, Sinaumed’s will also play a direct role in increasing state revenues which can be used for sustainable development.

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