TEMPO.CO, Jakarta - An online petition on change.org demanding Indonesian President Prabowo Subianto to cancel the value-added tax (VAT) hike plan to 12 percent has been signed by 65,171 people as of Wednesday, December 18, 2024, at 3:25 p.m. local time.

Bareng Warga, the initiator of this petition, considers the government’s VAT hike plan to be detrimental to citizens' economic condition, especially as the unemployment rate remains high in Indonesia. 

"We recall that people’s purchasing power has been on steady decline since May 2024. If the VAT hike persists, the purchasing power will not merely drop but free-fall,” reads the petition, titled “Pemerintah, Segera Batalkan Kenaikan PPN!” which translates to “Government, Promptly Cancel VAT Hike!”

"On that basis, we believe the government must scrap the VAT increase stipulated under the Tax Harmonization Law. Before the wounds of our people get worse. Before online loans become a bigger problem," it wrote.

Minister Airlangga: VAT Hike is Not Determined by the Government 

Coordinating Minister for Economic Affairs Airlangga Hartarto said that it was not the government that determined the VAT increase to 12 percent, but the House of Representatives (DPR).

Airlangga mentioned that the increase in VAT to 12 percent was the decision of the parliament by ratifying Tax Harmonization Law No. 7 of 2021. All factions within the parliament bar the Prosprous Justice Party (PKS) agreed to pass the law, he said.

"So, it was not the government’s decision,” said Airlangga at Halim Perdana Kusuma Airport, East Jakarta, on Tuesday, December 17.

Meanwhile, Minister of Finance Sri Mulyani stated that the application of 12 percent VAT will be imposed on luxury goods and services. 

Sri Mulyani exemplified several luxury goods and services that will be subject to 12 percent VAT, namely premium rice, premium fruits, premium meat (such as wagyu and kobe beef), premium fish (such as salmon and premium tuna), shrimp, and premium crustacea (such as king crab).

Next, premium education services such as expensive and internationally standardized education services, premium or VIP medical health services, and household electricity customers with a capacity of 3,500 to 6,600 VA.

The list of essential goods and services exempt from VAT includes rice, meat, fish, eggs, vegetables, milk, consumer sugar, education services, healthcare services, public transportation, labor services, financial services, insurance services, polio vaccines, and water usage.

There are also several other basic commodities whose taxes remain at 11 percent, such as wheat flour, industrial sugar, and Minyakita. The government maintains the VAT rate for these three commodities by subsidizing the 1% VAT rate. 

Eka Yudha Saputra, Oyuk Ivani, and Andry Triyanto contributed to the writing of this article.

Editor’s Choice: List of Goods and Services Affected by the 12 Percent VAT Increase as of January 1, 2025

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