The Impact of Tax Revenue and Inflation Rate on Economic Growth in Indonesia

Abstract

Introduction: This study explores the impact of tax revenue and inflation on economic growth in Indonesia during the period of national recovery following the COVID-19 pandemic. Tax revenue plays a fundamental role in supporting government spending and development programs, while inflation poses risks to economic stability and purchasing power.

Methods: A multiple linear regression approach was used to examine the relationship between economic growth and the two variables—tax revenue and inflation. The data was collected from national statistical agencies and other relevant institutions.

Results: The study found that tax revenue contributes positively to economic growth by enabling the government to invest in infrastructure, education, and public services. In contrast, inflation has a detrimental effect, as rising prices reduce household consumption and discourage investment.

Discussion: These findings emphasize the need for a balanced fiscal and monetary approach. Strengthening tax collection systems while simultaneously implementing measures to keep inflation under control is crucial for fostering economic resilience and long-term growth.

Conclusion: Policies that enhance tax efficiency and maintain price stability are essential for ensuring sustainable economic development in Indonesia.

Novelty: This research offers a current perspective on the dual influence of fiscal and monetary variables on Indonesia’s economy during a critical post-pandemic period of adjustment and growth.