Sri Mulyani Wants To Increase VAT Rates, KSPI: Cruel, Has Lost Her Mind

Minister of Finance, Sri Mulyani. (Photo: Doc. Setkab)

JAKARTA - The government plans to increase the rate of value-added tax or VAT. The goal is to optimize tax revenue in the coming years.

This plan is still being discussed within the Ministry of Finance internally. Although there is no clarity regarding this VAT rate increase, the Confederation of Indonesian Trade Unions (KSPI) opposes the plan.

KSPI President, Said Iqbal, stated the government's decision was not right. Because discussed in the midst of declining household consumption conditions. Consumption, which initially contributed to the economic growth of 56-57 percent, is currently only between 49 and 52 percent.

The cause of the decline in consumption is purchasing power. Iqbal said, there are two causes of declining purchasing power. First, low wages. Second, the price of goods increases.

"The wages are cheap, the price of goods has increased. Now the increased VAT has resulted in the price of goods increasing. How cruel is this Minister of Finance, Sri Mulyani," he said in a virtual press conference, Friday, May 28.

Iqbal said that the government's failure to collect taxes from the rich through the tax amnesty has now been charged to the public through an increase in the VAT rate.

"How come it is now being charged to the lower-middle-class people? Even to the poor, because whether the poor, the middle class, the rich, they surely spend. How come they are charged with increasing VAT?

For this reason, Said Iqbal asked the DPR RI not to include the increase in VAT rates in the national legislation program (Prolegnas). Because, he said, this will cause the price of goods to increase.

"Let alone entering the discussion, entering the National Legislation Program it must be rejected. If this is still voted for by the DPR, it means that the DPR is only siding with those who have money, not for representatives of the people," he said.

Previously, the Secretary of the Coordinating Ministry for the Economy, Susiwijono Moegiarso, said that there had been no inter-ministerial discussion regarding the plan to increase the VAT rate. According to him, the plan is still being discussed internally at the Ministry of Finance.

"The point is that we respect the discussion of internal discourse at the Ministry of Finance, but there is no inter-ministerial coordination meeting to discuss this," he said in a virtual press conference, Monday, May 17.

Susiwijono said that his party would immediately ask for an explanation regarding the plan to increase the VAT rate to the Ministry of Finance if there was a definite plan.

The increase plan will be submitted to the DPR

Coordinating Minister for the Economy Airlangga Hartarto said that the government's efforts to increase VAT were currently still under discussion. Even so, he acknowledged that this plan would be included in the draft law (RUU) on General Provisions and Tax Procedures (KUP).

"The government is still discussing the VAT rate, and this is also related to the discussion of the Law (UU) that will be carried out to the DPR, namely the Bill on General Provisions and Tax Procedures (KUP), and all of this will be discussed by the government, at a later time will be delivered," he said in a virtual press conference, Wednesday, May 5.

Referring to Law no. 42/2009 concerning the Third Amendment to Law no. 8.1983 concerning VAT on Goods and Services and Sales Tax on Luxury Goods, the government can change the amount of levies.

The law regulates that the lowest tariff changes are at 5 percent and the highest is 15 percent. Meanwhile, the current VAT rate is 10 percent. This increase in VAT rates will have an impact on increasing the prices of goods and services.