TEMPO.CO, Jakarta - Deputy Speaker of the House of Representatives (DPR) of Indonesia, Adies Kadir, claimed that the increase in the Value Added Tax (VAT) rate to 12 percent would not affect the general community commodity sector. He said that the increase in VAT was a mandate of Law Number 7 of 2021 concerning the Harmonization of Tax Regulations (HPP) which must be implemented by the government.

"The 12 percent VAT policy has gone through careful technocratic considerations, so it will not hit people's purchasing power or cause uncontrolled inflation," said Adies in a written statement, on Monday, December 30, 2024.

According to him, if you look at the list of commodities included in the Consumer Price Index, only 33 percent of goods and services are objects of VAT. "This means that most of the commodities consumed by the public every day are not affected by the increase in VAT rates," said the Golkar legislator.

Adies said that the increase in VAT in Indonesia is considered relatively looser compared to other countries such as Vietnam. In Vietnam, he said, the lower limit of the VAT rate is 5 percent, while in Indonesia it is 0 percent, which even covers 67 percent or most of the community's consumer goods.

"Don't let mature technocratic calculations go astray because of negative sentiment in the market and in the industry. I hope all parties are wise in responding to this tax increase," said Adies.

According to him, President Prabowo Subianto's attitude in responding to Joko Widodo's legacy policy is correct. The reason, said Adies, is that the government must obey the mandate of the law.

"And the selective implementation of 12 percent VAT on luxury goods is a win-win solution for all parties," said Adies.

He said that the government is providing various incentives for the community, as a stimulus for the increase in VAT. Starting from the increase in the Provincial Minimum Wage by 6.5 percent, job loss guarantees for those who are laid off, and Article 21 Income Tax borne by the government for workers in the labor-intensive sector with salaries of up to Rp10 million per month.

Meanwhile, for MSMEs, said Adies, there will be an exemption from income tax for turnover below Rp500 million. Then for entrepreneurs there will also be a 5 percent interest subsidy for the textile sector, to food assistance for the poor.

"With these various incentives, I am optimistic that the national economy in 2025 will remain resilient," said Adies.

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