VAT Will Increase To 12 Percent, This Is The Impact

JAKARTA - Researcher from the Center of Industry, Trade and Investment Institute for Development of Economic and Finance (INDEF) Ahmad Heri Firdaus conveyed that the increase in Value Added Tax (VAT) rates to 12 percent by 2025 will greatly impact various national economies.

"The increase in VAT (single tariff) will cause the industry's competitiveness to decrease, because production costs are increasing. It is necessary to consider a multi-rate scheme," he said in his statement, quoted on Sunday, March 24, 2024.

Ahmad said that on a macro basis, the increase in VAT of 12 percent would cause a higher decrease in purchasing power in the midst of food inflation. According to him, the weaker people's purchasing power will also have an impact on reducing industrial sales and utilization.

On the other hand, along with the increase in VAT, there is an increase in costs when demand slows down, it is feared that adjustments will occur in production input, including adjustments to the use of labor.

According to Ahmad, this will have an impact on PPh revenues which are threatened with decreasing.

Because, when the VAT increases, the Government hopes to increase state revenues on aggregate. However, it is necessary to calculate costs and benefits for the economy in the short and long term.

Ahmad added that to increase state revenues, without increasing VAT to 12 percent, namely by expanding the tax base of VAT, the potential for tax revenue will increase.

"To get greater state revenue, not through an increase in VAT rates, but through a selection of new taxpayers," he explained.

To get greater state revenue, not through an increase in VAT rates, but through the selection of new taxpayers,

In addition, Ahmad added that the extensification of tax revenues includes extensification of excise and optimization of non-tax state revenues.

"Extensification of excise is also planned to be implemented in the coming year," he concluded.

Pic : Illustration from Antara