The Increase In VAT To 12 Percent Will Reduce People's Purchasing Power
JAKARTA - Economic observer from the Indonesia Strategic and Economic Action Institution Ronny P Sasmita assessed that the increase in VAT to 12 percent in 2025 will have an impact on purchasing power pressure to the public.
"Because the service provider companies usually do not want to cover VAT, so usually the road they take is to shift the burden of increasing VAT to consumers by increasing prices," said Ronny, quoted from Antara, Wednesday, November 20.
The imposition of taxes on a number of tangible items which include electronics, fashion and automotive, he said, will have an impact on sales, this also applies to goods that are routinely consumed by the public.
Meanwhile, the government has not yet decided on the provincial minimum wage (UMP) in 2025. He also hopes that the determination of wages for 2025 will also pay attention to inflation as one of the components in the UMP.
Because, he said, the increase in the price of goods and services, if not followed by an increase in people's income, will further suppress demand for the production of goods and services and will have an impact on production.
"The slight increase (VAT to 12 percent) will increase purchasing power to the middle and lower middle class whose income has been very depressed in the last two years since post-pandemic," he said.
Previously, Minister of Finance Sri Mulyani Indrawati stated that the plan to increase the value added tax rate (VAT) to 12 percent on January 1, 2025 would still be carried out according to the mandate of the Law (UU).
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The 12 percent VAT discourse is contained in the Tax Regulation Harmonization Law (HPP) which was prepared in 2021. At that time, the government considered health conditions to the basic needs of the community which were affected by the COVID-19 pandemic.
"This means that when we make policies regarding taxation, including this VAT, it is not done blindly and as if we have no affirmation or attention to other sectors, such as health and even at that time including staple foods," said Sri Mulyani.