DPD Members: Review Of VAT 12 Percent And Social Assistance For Affected Residents

Illustration - Siluet visitors shop at shopping centers in Jakarta. (ANTARA)

JAKARTA - DPD RI member Dr R Graal Elibowo asked the government to review and finalize the VAT increase policy to 12 percent for social assistance (bansos) for people affected by the policy.

"Ask the government to review and finalize the policy to increase VAT to 12 percent because it will have an impact on the economy, especially the lower middle class, including people in the regions," Graal said when contacted in Jakarta, Wednesday.

The senator from the North Maluku Electoral Region (Dapil) said he agreed that the goal targeted by the government through the increase in VAT was to increase state revenue.

"I agree that the goal targeted by the government is to increase state revenue by increasing the tax ratio, one of which is for redistribution of wealth by increasing the tax ratio. One of its functions is to redistribute wealth," he said.

Even so, according to Graal, in addition to increasing the percentage of VAT, the government needs to review other alternatives to increase this tax ratio. For example, he said, checking other tax potentials that are relatively low in value compared to VAT. This step, according to Graal, can also be accompanied by improvements to the tax system so that tax absorption becomes more optimal.

Meanwhile, regarding the government's plan to provide social assistance for the middle class affected by the VAT increase policy, Graal assessed that social assistance could indeed be an instrument to prevent those who are categorized as vulnerable to poverty from entering the brink of poverty.

He views that the provision of social assistance can maintain people's purchasing power to still be able to access basic needs. However, Graal assessed that the social assistance distributed should be in the form of subsidies for goods or commodities related to the lives of many people.

He also assessed that the provision of social assistance also needed to be studied comprehensively because such a scheme means that there is a budget allocation. In fact, he continued, the initial goal of increasing VAT was to increase state revenue.

"The most important thing is that there must be other mitigation policies to anticipate the domino effect as a result of this VAT increase policy. One thing that is certain is the increase in prices in certain commodities which also spread to other aspect prices," he added.

Previously, the Chairman of the National Economic Council, Luhut Binsar Pandjaitan, gave a signal that the adjustment of the Value Added Tax (VAT) rate to 12 percent from 11 percent had the opportunity to be postponed. This is because the government is preparing a stimulus for the lower middle class.

"Yes, it's almost certain to be postponed, let's go earlier. (Stimulus policy?) Yes, that's about it," said Luhut.

He revealed that currently, social assistance (bansos) is being calculated for people affected by Value Added Tax (VAT) to 12 percent. The social assistance will be in the form of electricity subsidies.