Will The Basic Food Tax Be Implemented Next Year? Here's The Economist's Answer

Illustration (Photo: Doc. Ministry of Finance)

JAKARTA - The government's discourse that intends to impose a tax levy on a number of basic necessities (sembako) with certain criteria is still unclear. However, it is believed that the government will continue to implement this policy sooner or later.

Economic observer at the Center of Reform on Economics (CORE) Indonesia Yusuf Rendy Manilet said the government needed to carefully consider every step related to efforts to deepen the potential for state revenues, including the expansion of tax objects.

"It should also be realized that specifically for next year, the government's plan to impose taxes, especially on new tax objects and subjects, must be carried out very carefully," he said when contacted by VOI, Wednesday, September 8.

Rendy realized that the post-pandemic fiscal pressure and the second wave of the delta variant made state finances in an unfavorable situation. However, the recovery and protection efforts must still be pursued by the state, especially in the health and economic sectors.

"Next year is still a transitional process of economic and health recovery, so it is very important to consider all aspects before releasing a new regulation," he said.

Rendy added that he projected that there would be special impacts that would accompany if the government imposed a basic food tax next year.

"In my opinion, the imposition of taxes on goods that were previously exempt from taxes could trigger an inflation effect even though the government claims that the taxed basic necessities are not staple food items," he said.

To avoid this risk, Rendy encouraged the government to shift the focus on expanding the tax object from basic necessities to other sectors.

"On the other hand, there are still opportunities to explore other subjects and objects such as the carbon tax or the tax for the rich, and also by increasing the administrative capacity of the DGT (Directorate General of Taxes) itself," he said.

As is known, the polemic of the basic food tax arose some time ago when the government discussion document that had been sent to the DPR was leaked to the public.

In the editorial notes, there are three schemes in the implementation of the Value Added Tax (VAT) for basic necessities. First, the proposed VAT of 12 percent. Second, the multi-tariff scheme is 5 percent lower than the first scheme by strengthening legality through a Government Regulation. And the third is through the final 1 percent VAT method.

Until now, the discussion of the policy is still stagnant and there is no sign that it will be resumed in the near future. This was confirmed by the Expert Staff of the Minister of Finance in the field of State Expenditures at the Ministry of Finance, Kunta Wibawa.

"It has not been discussed with the DPR and its implementation is not now," he said in a virtual discussion held by the Ministry of Finance last June.