VAT 12 Percent Is Considered A Strategic Step To Increase State Revenue

Tax (Photo: dock. Unsplash)

JAKARTA - The policy of increasing value added tax (VAT) by 1 percent to 12 percent is considered a strategic step to increase state revenue.

Law and economic observer Pieter C Zulkifli believes the discourse is President Prabowo Subianto's move to achieve the 8 percent economic growth target.

"To achieve the 8 percent economic growth target, the government needs a State Revenue and Expenditure Budget (APBN) about double the current budget," quoting Antara.

However, considering Prabowo's promise to eliminate extreme poverty, Pieter said there needed to be courage, innovation, and policies that sided with the people.

Meanwhile, the increase in VAT can increase the price of goods and services in the market, which automatically weakens people's purchasing power, especially low-income groups.

For this reason, he said the policy of increasing VAT rates was the first test for the Prabowo government.

On the other hand, tax observer from the Center for Indonesia Taxation Analysis (CITA) Fajry Akbar believes that additional state revenue from the 12 percent increase in VAT needs to be focused on supporting the welfare of the people.

The government is said to need to ensure that additional revenue from this tax is distributed to the lower middle class, both in the form of public facilities and social security.

Fajry added that the government is expected to be able to provide greater benefits than the burden that must be borne by the community due to an increase in VAT of 12 percent.

Head of Bank Permata economist Josua Pardede also suggested that the government strengthen social assistance programs (bansos) to maintain people's purchasing power as a result of the 12 percent increase in VAT.

In addition, he also proposed providing tax incentives for MSMEs to maintain productivity and competitiveness amid the possible increasing pressure of VAT.