Discourse On VAT Levy Increase At Crossroads, Want Single Tariff Or Multi Tariff?

Investment illustration (Irfan Meidianto/VOI)

JAKARTA - The government through the Ministry of Finance is said to be discussing plans to increase the Value Added Tax levy to support the State Budget or state budget.

The discourse came to light after The Minister of Finance Sri Mulyani stated at the National Development Planning Deliberation last week.

"The government continues to explore the potential and increase in tax ratios", she said.

Separately, the Director-General of Tax of the Ministry of Finance Suryo Utomo said the increased need for funds during the pandemic was the main reason for the government to adjust the revenue side of the country. The reason is that the budget deficit that has swelled in the last two years occurred due to fiscal instruments trying to reduce the impact of COVID-19 on various sectors, especially health.

"Over time the need for state money for many sectors has changed a lot", she said, Monday, May 10.

Nevertheless, Suryo said that changes in the amount of VAT need to be consulted and ratified with the House of Representatives because of the rule of law. In addition, the government has not set a standard scheme related to the form of levies in the field.

Please note, there are two common schemes in VAT determination. The first single tariff refers to Law No.46/2009 on VAT and Sales Tax on Luxury Goods (PPnBM), which has a range of 5-15 percent.

Second, multi-rate VAT. If this scheme is determined, changes are required for the reference that has been used, namely Law No.46/2009 on VAT.

"We'll see what the results will be whether it's single tariff or multi-tariff", Suryo said.

For information, in the State Budget 2021, the government targets state revenues of IDR 1,743 trillion.

The amount will be supported by tax receipts of IDR 1,229 trillion, customs and excise IDR 215 trillion. Then, Non-Tax State Revenue (PNBP) IDR 298 trillion, as well as grants of IDR 900 billion.

Meanwhile, spending is allocated a budget of IDR 2,750 trillion. This figure makes the structure of the State Budget 2021 has a deficit of around IDR 1,000 trillion which is sufficient through several financing released by the government.

As for the posture of the State Budget 2022, the state revenue is planned next year around IDR 1,823 trillion with a spending sector of IDR 2,631 trillion.

This means that the budget deficit will be in the range of 800 trillion. This amount is better than the 2021 State Budget which is believed to create a budget deficit of IDR 1,000 trillion.