Sri Mulyani Affirms The Imposition Of VAT Not For Cheap Basic Food: Clear, That's The Point

Minister of Finance Sri Mulyani Indrawati. (Photo: Doc. Ministry of Finance)

JAKARTA - Minister of Finance (Menkeu) Sri Mulyani emphasized that her party did not plan to collect Value Added Tax (VAT) for cheap basic necessities and would also not be discussed in the Revision of the Law on General Provisions and Tax Procedures (RUU KUP).

"The point is that we don't collect VAT on (cheap) basic necessities, we don't collect and whether in the KUP Bill later there will be. For that, it's not collected, it's clear, very clear there," said Minister of Finance Sri Mulyani during a working meeting with the Commission XI DPR RI in Jakarta, as quoted from Antara, Tuesday, June 15.

Minister of Finance Sri Mulyani confirmed that basic food items will be taxed, but the government will only target premium products which are also included in the basic food category. The Minister of Finance gave examples of Shirataki or Basmati Rice to Wagyu and Kobe Beef.

"So if you look at the price (rice) of Rp10,000 per kilogram to Rp50,000 per kilogram or Rp200 thousand per kilogram, this means that you can claim the same basic necessities," said Sri Mulyani.

"There is Wagyu beef, Kobe beef, which can cost Rp3 million or Rp5 million per kilo. There is ordinary meat that people consume for a kilo now, maybe Rp90 thousand."

Sri Mulyani continued that the phenomenon of the emergence of very high-end products, but still included in basic necessities, is what the government is trying to balance.

"In fact, the tax tries to address the issue of justice because the diversification of our society is very diverse," said Sri Mulyani.

He emphasized that an item would not be subjected to tax if it was not an object, therefore basic necessities would be included in the tax object. However, the government will implement a multi-tariff scheme, so that basic food items commonly consumed by the general public will not be taxed.

"It can be taxed with the exemption of taxes, DTP, the tariff can be zeroed versus the higher tariff, that's why we convey it in multi-tariff VAT. So the object is correct, if it is not an object of tax, no matter what, it cannot be taxed," said Sri Mulyani.

She further conveyed that the details regarding the VAT imposition would be discussed properly and comprehensively with the DPR later.

"We will discuss with the permission of the leadership of the DPR, that the bill is properly and comprehensively discussed. In the KUP Bill, we will present it," said Sri Mulyani.