Economist Suggestions Before The Government Increases VAT 12 Percent Next Year

JAKARTA - Paramadina University Jakarta economist Wijayanto Samirin said that the 12 percent increase in value added tax (VAT) rates must be accompanied by improved governance in the tax sector.

He said, if you look at the current very difficult fiscal situation, increasing the VAT rate is actually a less ideal step even though it can be understood.

"The low tax ratio is due to our narrow tax base, prevalent tax corruption and low tax compliance. Consider this increase I see purely to secure our fiscals, especially facing tough situations in 2025 and 2026," said Wijayanto as reported by ANTARA, Wednesday, December 18.

For your information, the government has officially set an increase in VAT rates to 12 percent which will take effect from January 1, 2025.

Wijayanto explained that providing incentives from the government is the right step to prevent a decrease in purchasing power.

However, according to him, the key to success from incentives is implementation in the field, the more complex incentives provided, the more complicated the implementation in the field.

In addition, incentives will not run well if the target recipients of the incentive do not understand it; in this context, the government needs to communicate to entrepreneurs and the community, so that they are moved to take advantage of and the economy is stimulated to rotate.

Regarding this communication, said Wijayanto, so far the government is still far from optimal.

Responding to the government's statement that the economy was fine when VAT was implemented 11 percent in 2022, Wijayanto assessed that the situation in 2024 and 2022 could not be equated.

In 2022, Indonesia and the world will only recover from the COVID-19 pandemic, so there is an increasing demand for spending.

People experience euphoria to shop, take advantage of the various benefits they receive during the pandemic.

But at this time, the world economy is slowing down, the post- ahead effect of Donald Trump's victory in the US Presidential Election, aka Trump effect, will soon emerge, and the purchasing power of our people is weak.

Incentives are indispensable to anticipate that.

What we must not forget is the principle of justice in government policies. Policies related to the increase in VAT and UMP benefit the government and workers, but are burdensome for entrepreneurs. Various stimuli that were recently launched also did not clearly provide direct benefits for entrepreneurs," he explained.

He also advised the government in the future to issue policies that are also pro-entrepreneurs.

"Currently they are very difficult, don't let them break into charcoal, be pessimistic and don't want to invest, and even tend to divest. If this happens, it will be very difficult for our economy. If domestic entrepreneurs are lazy to invest and want to exit, how can we convince foreign investors to invest in Indonesia?," he explained.