PMII Urges Government To Review VAT Policy 12 Percent

JAKARTA - The Executive Board of the Indonesian Islamic Student Movement (PB PMII) advises the government to reconsider the policy of increasing VAT or Value Added Tax by 12 percent which is planned to take effect from January 2025.

"We ask the government to evaluate this policy because the economic impact can be very broad, especially triggering an increase in the price of goods and services which is a daily need for the community," said PB PMII General Chair M. Shofiyulloh Cokro, in a press statement in Jakarta, as quoted by ANTARA.

Shofiyulloh emphasized that this policy needs to be reviewed in order to maintain the economic stability of the lower class society, support the purchasing power of the middle class, and maintain the productivity of small business actors in Indonesia.

The chairman of the PB PMII's Economic and Investment Division, Ramadhan, said the same thing. He hopes that the government will involve the community more in this policy-making process to create social harmony, especially after the 2024 Christmas Day and ahead of the 2025 New Year.

"Through an in-depth economic study conducted by PB PMII, we urge the government to pay more attention to the welfare of the community, especially the lower middle class, which amounts very significantly," added Ramadhan.

Previously, the Coordinating Minister for Community Empowerment (Menko Pemmas), Muhaimin Iskandar, ensured that the implementation of VAT of 12 percent would not have an impact on the micro, small and medium enterprises (MSMEs) sector and the tourism sector.

"MSMEs and tourism, which are important sectors for the community, will not be subject to this policy," explained Muhaimin, who is familiarly called Cak Imin, in Jakarta, Wednesday.

He added that 12 percent VAT will only be applied to luxury or non-essential goods, so as not to burden the basic needs of the community. The government also ensures that there is relief for MSME actors so that they can continue to grow.

The selection of which sectors are affected has gone through a selection process. This policy is expected to support economic growth, protect the community, and ensure that additional funds from taxes are used for useful subsidies," he continued.

On another occasion, the Minister of Micro, Small and Medium Enterprises (MSMEs), Maman Abdurrahman, also emphasized that this policy would not affect the lower middle class.

He explained that the increase in VAT only applies to premium goods or the needs of high-end basic necessities. "This 12 percent tax is only for premium food ingredients, not basic necessities that are usually consumed by the wider community," said Maman.

The increase in VAT to 12 percent is a mandate of the law agreed between the government and the DPR during the COVID-19 pandemic.