12% VAT, Simalakama fruit from Jokowi for Prabowo

Bisnis.comJAKARTA — Determination of value added tax rates or NPP 12% considered a simalakama fruit for the President's government Prabowo Subiantoinherited from the previous leader, Joko Widodo.

Public policy observer Trubus Rahadiyansyah said President Prabowo Subianto may actually propose reducing the VAT rate. Remember that in Law Number 7 of 2021 Concerning the Harmonization of Tax Regulations (UU HPP), the government can regulate VAT rates within the range of 5% to 15%.

According to him, Prabowo had observed economic situationconsiders this tax increase as the “bitter medicine of choice” in the face of the consequences of the policies of the government of the 7th President of the Republic of Indonesia Joko Widodo (Jokowi) which can be considered the fruit of simalakama.

“This is indeed Jokowi's burden, so it is simalakama fruit for Prabowo,” he said BusinessWednesday (12/25/2024).

Furthermore, according to Trubus, one of the reasons why Prabowo chose this VAT increase was the scale tax burden which had been abandoned by the previous government. Then, Prabowo's campaign promises and cabinet size made spending needs even greater.

The government currently has to carry a fairly high state debt, with a total state revenue and expenditure budget (APBN) of around IDR 3.2 trillion, while the state debt is considered very important.

“The government has quite a high debt left by Jokowi, while the APBN of around IDR 3.2 trillion is not enough to cover the large debt, in the end all taxes will increase so that people will even scream if they are lower-middle class,” he said.

He added that although the VAT increase was already part of the UU HPP which was adopted, but this regulation still allows for an evaluation.

One option Prabowo can adopt, Trubus said, is the issuance of a Perppu (government regulation replacing the law) if emergency conditions or social inequalities worsen.

“If this happens force majeure or in case of emergency, the government can take extraordinary measures by issuing a Perppu”, he said. This shows that even though this law is legal, the final decision remains in the hands of the government, depending on the evolution of the situation.

An increase in VAT is a way to close the tax revenue gap and increase state revenues, which it urgently needs to address. budget deficit. However, the impact on citizens' purchasing power and the business sector is a major concern.

Trubus stressed the importance of first examining the employment conditions and purchasing power of citizens before going further with this tax increase. Especially regarding the principles of justice and mutual cooperation.

According to him, although he was inundated with many incentives, there was no explanation of the criteria. luxury products and the premium that will be charged, then traders on the ground will apply the same price to increase each item without any party taking action.

Not to mention that the incentive limit is not only 2 months, so that after the specified time Prabowo can increase the prices of other products again.

“Even if the issuance of a Perppu is only authorized if the situation is urgent or force majeure whether it is a question of social inequalities, but it also depends political will. “If Prabowo wants the economy to grow by 8%, he must first stabilize employment and purchasing power before increasing VAT,” Trubus concluded.

Dark notes on Prabowo's government

Meanwhile, Executive Director of the Center for Economic and Legal Studies (Celios), Bhima Yudhistira, confirmed that the implementation of the 12 percent VAT rate would be a black mark before the 100th day of Prabowo Subianto's administration .

He said the implementation of this policy, which will begin on January 1, 2024, will have a broad impact on society. In addition, economic players also strongly protested against this decision.

“12% VAT will be the most historic black mark in Indonesia 100 days of the Prabowo government-Gibran. “Because it has a considerable impact on society, economic actors are also protesting. It is as if Prabowo's program sacrifices many parties,” he said. BusinessTuesday (12/24/2024).

According to him, three main factors are pushing the government to impose a VAT of 12%. First of allthe government currently needs tax revenue to finance interest payments and maturing debts.

Moreover, Bhima said, total debt service next year it will reach IDR 1.3 trillion, or 59.3% of the total tax revenue target for 2025.

“This debt will become a serious problem if the government does not pay it.” debt “There could be negative sentiment in the financial markets, the rupee could weaken significantly,” he said.

SecondBhima added that the program needs quick victory like free nutritious meals (MBG) and food barns or food sector this will drain a huge budget.

The government finally sought a shortcut by considering VAT as a solution to fill the APBN deficit which almost reached 3% due to the importance of funds intended for the 2025 program.

Bhima also said that the final reason for increasing the VAT rate by 12% was that it was considered the easiest way to get new revenue compared to other hard work such as tax compliance And tax wealth.

“This government does not want to think seriously, it likes to take shortcuts, so anyone can easily increase tax rates. While pursuing the wealth tax or wealth tax, wealth tax it requires additional work to match data, bill, and trace assets overseas. “Because we are lazy, those who are being chased are the existing taxpayers,” Bhima concluded.