BELIOS: VAT 12 Percent Of Luxury Goods Have A Positive Impact On The Economy Sekfor

Photo Illustration: Antara

JAKARTA - Economist and Director of the Center of Economics and Law Studies (Celios) Bhima Yudhistira views that the increase in Value Added Tax (VAT) to 12 percent in 2025 which is intended only for luxury goods has a more positive impact on the economy.

"The 12 percent increase in VAT is only for luxury goods that are more positive to the economy, although the current price of goods has already increased because the technical regulations for the Minister of Finance (PMK) have been issued late," said Bhima, quoted from ANTARA, Wednesday, January 1, 2025.

Furthermore, he said that the government should finally consider the effect of the purchasing power of the lower middle class and MSMEs. However, according to Bhima, the government should have started preparing an 8 percent reduction in VAT rates, after the cancellation of VAT 12 percent of general goods and services.

He added that there are many options available for the government to replace VAT revenues that do not increase. One of them, the government can start designing a wealth tax, the total assets of the super-rich can be levyed by 2 percent.

"So it's not an income tax, yes. But the assets tax that Indonesia has not yet had. The estimate will be obtained of Rp. 81.6 trillion per day with the implementation of the wealth tax. OECD and the G20 will encourage the implementation of the wealth tax as well," said Bhima.

Second, namely the carbon tax mandated by the Law on Harmonization of Tax Regulations (UU HPP), can also be carried out this year. Regarding the carbon tax, said Bhima, the government only needs to issue its PMK.

Once enforced to the coal power plant, the carbon tax proceeds will be used to boost renewable energy spending that absorbs labor. It's also good for the carbon tax for the environment," he said again.

Then the third, the VAT acceptance option can also be through a coal production tax outside of higher royalties. Fourth, cover tax leaks in the palm oil and mining sectors.

"Fifth, evaluating all tax incentives that are not on target. For example, nickel smelter companies whose profits are huge do not need to be given a tax holiday," said Bhima.

Previously reported, the government officially set the increase in VAT from 11 percent to 12 percent in 2025 only applies to luxury goods and services.

The goods and services charged with the 12 percent VAT rate are goods and services listed in PMK Number 15 of 2023 concerning the Imposition of Sales Tax on Luxury Goods (PPnBM).

These items include homes / luxury apartments / consumers at prices above Rp. 30 billion, private aircraft, cruise ships, yachts, luxury motorized vehicles, and so on.

Outside the category of luxury goods and services, Minister of Finance Sri Mulyani said that the VAT rate was still at 11 percent. Meanwhile, specifically for basic materials, the government waives VAT rates.

Details of the rules regarding taxation are stipulated in PMK. Meanwhile, all economic stimulus packages for the community and tax incentives announced by the Coordinating Minister for Economic Affairs Airlangga Hartarto on December 16, 2024 remain valid.