Observers Propose High PPH For Sales Of Used Clothes

Illustration. (Photo: Doc. Antara)

JAKARTA - Economic observer at Denpasar National University of Education, Bali, Prof. Ida Bagus Raka Suardana proposed that the government impose an income tax (PPh) in excess of the provisions for the turnover of selling used clothing.

"If the tax is needed, it will be increased to compete with local products," said Raka Suardana, in Denpasar, quoted from Antara, Monday, March 20.

In addition, he suggested that the government check the legality of its business. The effort was made so that when the action was taken it would not immediately only confiscate and destroy used clothes.

As for the provisions of Government Regulation (PP) Number 55 of 2022 concerning Adjustment of Regulations in the Income Tax Field, the final income tax is 0.5 percent for certain taxpayers who have a maximum gross circulation (omzet) of IDR 4.8 billion a year.

In line with Raka Suardana, economic observer from the Center of Economic and Law Studies (Celios) Bhima Yudistira also proposed to the government to compensate small-scale clothing traders and find solutions so that they can switch to selling local products of finished clothing.

Meanwhile, the used clothes confiscated by the government, he said, could still be given to victims of natural disasters and the poor.

"Don't destroy it right away, while many poor people can't afford to buy clothes," he also said.

This effort, he said, needs to be done as a solution to small traders because used clothing transactions or Thrifting have been in the country since 1990.

According to him, even though the clothes are used, the market is still interested in buying these commodities because local clothing products are less competitive in terms of quality and price.

The government, he said, could help improve quality and reduce the cost of producing clothes to be local with cheap financing, assistance and joint promotional efforts.

The director of Celios added that currently the interest rate of the textile industry is above 10 percent.

Meanwhile, the interest for MSMEs varies, which is in the range of 15-30 percent per year.

Competition of loan interest rates in China is only 4-5 percent and Vietnam is 7-8 percent. So it's difficult to head to head because domestic loan interest is expensive," he also said.

The government prohibits imports of used clothes regulated in the Regulation of the Minister of Trade Number 18 of 2021 concerning goods prohibited from exports and imports.