VAT And PPh Rates Make Purchasing Power Sluggish, Dpr: A Reasonable Increase In Income Tax Of 'Super Tajir' People

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JAKARTA - Member of pan faction of the House of Representatives Guspardi Gaus said he was surprised at the government's plan to raise the tax rate, namely VAT and PPh. According to him, this plan will increase the burden and weaken the purchasing power of the community.

"This tax increase plan clearly hurts the sense of community justice, the impact will be a heavy burden on the wider community, especially the lower middle class," Guspardi said on Wednesday, May 26.

According to him, it is not the right time to raise Value Added Tax (VAT), especially Indonesia is still faced with the condition of the COVID-19 pandemic which is still experiencing an alarming wave and it is not yet clear when it will end.

"The country is again teetering on economic recovery. The indicators are quite clear, economic growth in the first quarter of 2021 is still contracting, in the range of -0.74 percent. The government seems like looking for a shortcut by raising taxes that should encourage public spending," explained the legislator from West Sumatra.

Members of the Legislative Body of the House of Representatives explained, the government included the issue of tax increase (PPN and PPh OP) into the Draft Law on General Provisions and Procedures for Taxation (Bill KUP). However, said Guspardi, beleid which was established as a national legislation program in March until now has not been discussed in the baleg meeting.

To that end, Guspardi asked the government not to rush to raise the tax rate that ends up blundering for the national economic recovery. Better, he said, the government is pursuing a class of non-compliant and rogue taxpayers who are still evading their taxes despite being granted a tax amnesty in 2016.

"Raising income tax for 'super tajir' people is very reasonable," concluded the member of Commission II of the House of Representatives.

Reportedly, Minister of Finance Sri Mulyani Indrawati in the document Macroeconomic Framework and Fiscal Policy Principles (KEM PPKF) 2022 plans to add a layer of taxable income by changing the income tax scheme (PPh) of private persons (OP).

The current PPh OP tariff is stipulated in Law No. 36 of 2008 concerning Income Tax. Article 17 of the Act stipulates there are four layers of personal tax rates based on income per year.

First, taxable income up to Rp50 million in one year is priced at PPh of 5 percent. Second, above Rp 50 million to Rp250 million by 15 percent. Third, above Rp250 million to Rp 500 million is charged at a PPh rate of 25 percent. Fourth, taxable income above Rp500 million is a personal income tax rate of 30 percent.

Previously, Coordinating Minister for Economic Affairs Airlangga Hartarto said the government will soon also propose a revision of the rules for increasing VAT rates to the Dpr.

With this plan, the VAT rate charged to consumers can be higher than the usual rate of 10 percent. But the Government has not indicated what percentage of the planned VAT increase will be.