<![CDATA[This study aims to analyze the impact of the VAT rate increase on consumer purchasing power and its implications for businesses in Sukolilo District, Surabaya. The study used a qualitative approach with a descriptive method through a case study design. Data were obtained through in-depth interviews with consumers and MSMEs selected using a purposive sampling technique. Data analysis was conducted using the Miles and Huberman interactive model, including data reduction, data presentation, and conclusion drawing, and tested through source triangulation. The results showed that the VAT rate increase put pressure on people's purchasing power, characterized by increased household spending, changes in consumption patterns, and budget reallocation towards basic needs. These impacts also affected the business world through a decrease in the number of customers, transaction value, and sales volume. Nevertheless, business actors demonstrated adaptability through promotional strategies, product innovation, and the use of digital sales.]]>
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