Impact of Value Added Tax Policy on Retail Sector and Public Consumption

Tax policy is a vital instrument in the management of a country's economy. In 2024, the Indonesian government decided to raise the Value Added Tax (VAT) rate from 10% to 12%. This policy triggered various significant impacts, especially on the retail sector and public consumption at large. This study aims to analyze in detail the impact of the VAT rate increase on the performance of the retail sector and public consumption patterns in Indonesia. The research method uses a qualitative approach with in-depth interview techniques, documentation analysis, and a comprehensive literature study. The results found a significant decline in retail sector turnover, changes in consumption patterns towards cheaper alternative products, and adaptation of marketing strategies by business actors to maintain business stability. This research provides policy implications that the government should consider in designing a fair taxation policy that supports national economic growth.