LPS Chairman: It's Better To Improve Tax Systems To Maximize Absorption Than Increase VAT

Chairman of the Board of Commissioners of the Deposit Insurance Corporation (LPS) Purbaya Yudhi Sadive. (Photo: Doc. Antara)

JAKARTA - Chairman of the Board of Commissioners of the Deposit Insurance Corporation (LPS) Purbaya Yudhi Sadewa considers it better to improve the existing tax system to maximize the absorption of value added tax (VAT).

According to him, in a press conference in Jakarta, Thursday, March 21, on the one hand, he saw that a 12 percent VAT rate was needed to increase state revenue.

"But, I'm better off improving the existing system, so that from the existing one, for example 10 percent, but all of them enter. That's better the impact on state finances," said Purbaya in response to the plan to increase VAT rates to 12 percent starting in 2025, quoted by Antara.

In addition, he said that the excess of government money every year that is not used should be maximized to support domestic growth.

"When the economy is difficult, we should provide economic stimulus. Indeed, tax revenue needs to be increased, but not by hunting in a zoo," he said.

Going forward, he said the efficiency of tax arrangements should be further improved.

Previously, Coordinating Minister for Economic Affairs Airlangga Hartarto said the VAT rate would increase to 12 percent by 2025.

He said the rules for increasing VAT rates would be discussed further and implemented by the next government.

"We see that the Indonesian people have made choices, their choices are sustainable. Of course, if it is sustainable, the various programs launched by the government will continue, including the VAT policy (12 percent)," said Airlangga in Jakarta, Friday, March 8.

The increase in VAT to 12 percent is one of the government's tax adjustments plans regulated in Law Number 7 of 2021 concerning Harmonization of Tax Regulations (UU HPP).