The Ministry Of Industry Hopes That The 12 Percent VAT Increase Will Not Lower People's Purchasing Power

Photo: Special

JAKARTA - Director General of the Ministry of Industry (Kemenperin) Putu Juli Ardika hopes that the increase in Value Added Tax (VAT) from 11 percent to 12 percent starting January 1, 2025 will not have an impact on reducing people's purchasing power.

The reason is, industrial performance really depends on the level of people's purchasing power.

"Hopefully it will not have much effect on suppressing the industry for expansion. After all (the food and beverage industry) is influenced by the market. This market is related to purchasing power," Putu said when met by reporters at the Ministry of Industry's office, Jakarta, Thursday, November 21.

Putu also sees moments that will boost the performance of the food and beverage industry next year.

Even though there was an increase in VAT by 12 percent, according to him, the performance of the Mamin industry at the beginning of the year was still often influenced by the Christmas and New Year (Nataru) holiday period.

In addition, Putu said, every year the Mamin industry also often reaps rapid performance growth on National Religious Holidays (HBKN).

Based on data from the Central Statistics Agency (BPS), the food and beverage industry or Mamin was able to grow by 5.82 percent year on year (yoy) in the third quarter of 2024.

"We hope so, because after all now there is Nataru and a few months later religious holidays, the industry must be getting ready," he said.

Previously, Minister of Finance (Menkeu) 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).

The discourse of VAT 12 percent is contained in the Law on Harmonization of Tax Regulations (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 on 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.