JAKARTA The increase in Value Added Tax (VAT) from 11 to 12 percent which came into effect on January 1, 2025, is said to make the lives of the Indonesian people aka +62 people more difficult. Moreover, the rupiah exchange rate against the US dollar has recently also been under pressure.
According to Apindo Chairman, Shinta Kamdani, the increase in VAT rates itself will reduce people's purchasing power because the price of goods has become high due to the increase in transaction levies. Not to mention the weakening of the rupiah exchange rate which can create an imported inflation effect due to changes in the exchange rate.
He revealed that the weakening of purchasing power has actually occurred since the middle of this year, which can be seen from the successive deflations from May to September 2024, to the large decline in the number of middle class populations, from 57.33 million people in 2019 to 47.85 million people in 2024 based on BPS data.
So far, the Indonesian middle class has played an important role in boosting national consumption. This will be exacerbated by the plan to increase VAT to 12 percent as of January 1, 2025. This is what makes people's lives predicted to be more difficult," he said, Thursday, December 19, 2024.
The Presidential Special Advisor for Economic Affairs, Bambang Brodjonegoro, warned the government of Prabowo Subianto not only to rely on the inflation rate in observing the impact of the increase in VAT on the community's economy. This is because the impact of small inflation that the government claims from the increase in VAT rates can not only be seen in general, considering the potential for an increase in inflation cannot be equalized the impact between community economic groups.
Desil 5 ke 8 yang tadinya guncong dan near poor ini tentu memberatkan. Jadi kadang-kadang kalau kita melihat inflasi itu harus hati-hati. Inflasinya mungkin tampak kecil tapi dampak inflasi kecil itu bisa berbeda antara yang incomenya besar dengan income yang terbatas, ujarnya, Senin 23 Desember 2024.
He admitted that he had warned the government not to pursue state revenue by increasing tax rates. This is because the risk is great for many people, especially the purchasing power of the lower middle class. "So since I was in the finance ministry, my approach is that we should not be too quick to look for additional tax revenues by increasing the tax rate that is comprehensive in nature," added Bambang.
Bambang Brodjonegoro assessed that the fall in the purchasing power of the Indonesian people is just a matter of time, if the government continues to believe in the phenomenon that has actually occurred since the post-COVID-19 pandemic. The reason is, the loss of people's purchasing power occurs because in terms of income, the class of Indonesian workers is very small with the need for basic food spending which continues to skyrocket.
"So it's no wonder that someone complains that our purchasing power has decreased, because earlier the income couldn't move much, the cost could not be avoided so that the space for purchasing power was thin. Not to mention later if there was a fluctuation of the rupiah, then there was inflation, it just got thinner, even afraid of losing its purchasing power," said Bambang.
The finance minister in the first period of President Joko Widodo said, in terms of Indonesian people's income, the value was far behind when compared to other countries, even compared to neighboring countries. In terms of minimum wages, which on average this year is IDR 3.04 million, far behind Malaysia, which reaches an average of IDR 6.12 million per month, especially compared to Singapore which is valued at IDR 25.75 million per month.
On the other hand, when the income is mediocre, the cost of survival in Indonesia continues to skyrocket, which is reflected in the surge in the number of food inflation to the level of 8-10 percent since 2022 before finally deflation this year. Unfortunately for the community, Bambang continued, the high price of basic commodities does not only occur for foodstuffs, but rather adds to other basic needs that can actually be controlled by the government, such as drinking water to housing.
He said, in developed countries, free drinking water is directly provided by the government, while in Indonesia people still have to buy water that is suitable for drinking through bottled bottles, such as gallon water. "Finally, we had to buy water in gallons or bottled water, which may look cheap, but we buy it often in a decent volume, so it was forced to become a cost that we couldn't avoid and it would definitely reduce purchasing power," explained Bambang.
Director of Public Policy Celios, Media Wahyudi Askar stated that the statement by the Directorate General of Taxes (DJP) which said the impact of the increase in inflation due to the increase in VAT was only 0.2 percent, very inappropriate and tended to mislead the public. He said, three years ago or April 2022, the Indonesian government had increased VAT from 10 to 11 percent, but annual inflation jumped from 3.47 to 4.94 percent in just three months or to be precise in July 2022.
He emphasized that the reason for the DGT that the high inflation rate to the level of 5.51 percent in 2022 occurred was due to global price pressures, food supply disruptions, and improper fuel increases. Because, reflecting on the 2022 period, inflation jumped from 3.47 to 4.94 percent in just three months after the increase in VAT in April 2022. Meanwhile, the policy of increasing fuel was only carried out in December 2022.
"This means that the inflation anomaly occurs exactly after VAT is increased, and is certainly caused by an increase in VAT, compared to the problem of global price pressure and food supply that occurs throughout the year in 2022," said Media.
According to him, the 12 percent increase in VAT will affect a number of sectors such as consumption services, consumer goods, electronic products, to automotive products. The consumption service sector such as salons, laundry, cafes and even restaurants must carefully consider and calculate the impact of the increase in VAT in order to survive in the market. In the daily consumption sector such as the food, beverage, soap, shampoo, detergents, to various other household products will increase due to VAT.
"Not yet if we mention electronic money topups, credits including transportation tickets. Is such an impact taken into account by the government? Transactions (pulse, electronic money) that may seem trivial but are actually carried out almost every day by the community," said the Media.
However, the government through the Head of the Fiscal Policy Agency of the Ministry of Finance, Febrio Kacaribu, is optimistic that the impact of the increase in VAT to 12 percent on January 1, 2025 will not be significant for the Indonesian economy. The impact of increasing VAT on economic growth is not significant. Economic growth in 2024 is estimated to continue to grow by 5.0 percent," he said.
According to him, the existence of stimulus packages such as food assistance, electricity discounts, Home VAT Release, Income Tax Release (PPh) for one year for workers, textile factories, clothing, footwear, and others will be a cushion for the community. The current inflation rate is still relatively low. We estimate that the impact of the increase in VAT will only increase by 0.2 percent, so that inflation is predicted to still meet the 2025 State Budget target in the range of 1.5-3.5 percent, "Febrio's goal.
The English, Chinese, Japanese, Arabic, and French versions are automatically generated by the AI. So there may still be inaccuracies in translating, please always see Indonesian as our main language. (system supported by DigitalSiber.id)