Dasco Says 12 Percent VAT For Luxury Goods Only Increases State Revenue Of IDR 3.2 Trillion

VAT increased to 12% of the people reacted to this increase. (Illustration of Andry Winardi VOI)

JAKARTA - Deputy Speaker of the House of Representatives, Sufmi Dasco, said that the imposition of a 12 percent value added tax (VAT) for luxury goods and services only added Rp3.2 trillion. He said this figure was much smaller than if the increase in VAT was applied to all goods.

The policy of increasing tax rates only for luxury goods was decided by the government by implementing Law Number 7 of 2021 concerning Harmonization of Tax Regulations (UU HPP).

"With the implementation of this policy, it only adds IDR 3.2 trillion to the 2025 State Budget from the potential receipt of IDR 75 trillion if 12 percent VAT is applied to all goods and services," he said, quoted from Dasco's official Instagram @sufmi_dasco, Wednesday, January 1.

Dasco understands that the government is making difficult decisions amid the large budget needs this year.

"This is certainly a difficult choice for the government, but we really appreciate the government for prioritizing the interests of the small people," said Dasco.

Furthermore, Dasco said that there were three points decided by the Prabowo government in responding to the aspirations of the people regarding the increase in VAT. First, the VAT rate which rose 1 percent from 11 to 12 percent is only for luxury goods and services.

Second, the government stipulates that there will be no increase in VAT rates for goods and other services other than those in the luxury category.

"For goods and services other than luxury goods, there is no increase in VAT and 11 percent is still subject to the old tariff," he said.

Finally, said Dasco, the government decided not to apply VAT rates to goods and services that became the basic needs of the community.

"Third, goods and services which are the basic needs of the community, which so far have been free from VAT rates, are still provided with exemption facilities or subject to a zero percent tariff, still valid," he said.