Airlangga: Gov‘t-Borne Art. 21 Income Tax Reduces Economic Inequality

JAKARTA, DDTCNews - The government considers the government-borne (ditanggung pemerintah/DTP in Indonesian) Article 21 Income Tax incentive to play a role in increasing workers' take-home pay whilst reducing inequality.

Coordinating Minister for Economic Affairs, Airlangga Hartarto, stated that government-borne Article 21 Income Tax continues to be provided to certain workers with gross income of no more than IDR10 million per month. The incentive is valid until December 2026.

"We are still continuing the government-borne income tax for workers whose income is below IDR10 million," he said at a press conference, as quoted on Friday (7/8/2026).

Pursuant to MoF Reg. 05/2025, the government-borne Article 21 Income Tax incentive applies to permanent employees and non-permanent employees working in certain sectors. These sectors include the footwear, textile and garment, furniture, leather and leather goods and tourism industries.

Through this incentive, the Article 21 Income Tax that would otherwise be withheld from workers' salaries is borne by the government, enabling workers to receive a higher net income. This policy is also intended to safeguard people's purchasing power whilst fulfilling an economic and social stabilisation function.

In addition to tax incentives, Airlangga stated that the government continues to reduce economic inequality by lowering the unemployment rate and encouraging job creation.

To achieve this objective, the government is strengthening the quality of human resources through vocational education and national apprenticeship programmes. Through these programmes, the workforce is expected to possess skills aligned with industry requirements, thereby increasing opportunities to secure employment.

Airlangga expressed hope that the combination of tax incentives and vocational programmes would improve public welfare whilst reducing the Gini ratio.

"We continue to reduce unemployment and encourage ever-greater job creation, one way being through vocational training and internships to reduce the Gini ratio," he concluded.

Statistics Indonesia (Badan Pusat Statistik/BPS in Indonesian) recorded that the level of expenditure inequality among the Indonesian population, as measured by the Gini ratio, stood at 0.368 in March 2026.

This figure rose by 0.005 points compared with the Gini ratio of 0.363 recorded in September 2025. However, the Gini ratio declined by 0.007 points compared with March 2025, when it stood at 0.375. (dik)