<![CDATA[Value Added Tax (VAT) is one of the main sources of government revenue and plays an important role in financing national development and maintaining fiscal stability. In recent years, the Indonesian government has adjusted VAT rates as an effort to increase state revenue and strengthen fiscal capacity. However, this policy has also generated various economic impacts, particularly on inflation, purchasing power, and household consumption. This study aims to analyze the contribution of VAT to state revenue and its impact on economic stability in Indonesia. The research employs a literature review approach using qualitative methods. Data were collected from scientific journals, books, government reports, and other relevant publications related to the research topic. The findings indicate that VAT contributes significantly to state revenue due to its broad and relatively stable tax base. On the other hand, higher VAT rates may increase the prices of goods and services, leading to inflationary pressures and reducing consumers’ purchasing power, especially among middle- and lower-income groups. The decline in purchasing power may also affect household consumption, which is one of the key drivers of economic growth. Nevertheless, VAT remains an effective fiscal instrument for increasing government revenue when accompanied by policies that protect public welfare. The study implies that policymakers should balance the objective of increasing state revenue with the need to maintain economic stability, ensuring that tax policies remain effective, sustainable, and beneficial for society.]]>
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