By: Silvia AP * )
The increase in Value Added Tax (VAT) by 1% that has been announced by the government has become one of the hot topics of discussion among the public. This step has raised various responses, ranging from concerns about its impact on people’s purchasing power to optimism that the results of the increase will provide greater benefits in the form of pro-people programs. It is important for us to understand the background of the policy, the goals to be achieved, and how the government is committed to ensuring that this VAT increase will be balanced with the strengthening of various social and economic programs for the community.
In general, Value Added Tax is one of the important fiscal instruments for the country. Revenue from VAT contributes significantly to the State Budget (APBN). With an increase of 1%, the government estimates that there will be a significant additional revenue. This additional revenue is expected to be used to fund various programs that are national priorities, such as education, health, infrastructure, and social protection.
One of the main reasons the government raised the VAT rate was to address the increasing budget deficit due to various global and domestic economic pressures. The Covid-19 pandemic, for example, has forced the government to allocate huge funds for health care and economic recovery. In addition, fluctuations in commodity prices in the global market and international economic uncertainty add to the challenges in maintaining fiscal stability. Therefore, the move to raise the VAT rate is considered a realistic solution to strengthen the state revenue base.
Member of Commission VI of the Indonesian House of Representatives of the Democratic Party Faction, Herman Khaeron, said that this Law is a legal product of the previous government and the DPR, so the current government is obliged to implement it. He believes that President Prabowo’s government will not easily make decisions related to the mandate of the Law to increase this tax, so the right policy must be sought in its implementation.
Herman believes that the increase in VAT is also accompanied by an increase in pro-people programs and incentives, so that it can maintain people’s purchasing power and the economy in general. Regarding the concerns of various groups regarding the impact on the increase in other goods and services, Herman believes that the government has considered and prepared its mitigation.
Even with the various incentives that will be launched, this VAT increase policy will not only minimize the short-term impacts it causes, but it can also increase the government’s fiscal capacity to implement national development programs that will bring economic growth to the people, nation and state.
In addition to these programs, the government also plans to provide special incentives for the micro, small, and medium enterprises (MSMEs) sector. MSMEs are the backbone of the Indonesian economy, and many are still struggling to recover from the impact of the pandemic. These incentives can take the form of tax breaks, easier access to financing, and training and mentoring to increase business capacity. By supporting MSMEs, the government hopes to encourage inclusive and sustainable economic growth.
In its public communication, the government emphasized that the increase in VAT is not merely a step to increase state revenue, but also part of a long-term strategy to create a fairer and more efficient tax system. The government is committed to continuing to improve tax governance, including expanding the tax base and increasing taxpayer compliance. Thus, the tax burden can be distributed more evenly across all levels of society.
According to the Head of the Fiscal Policy Research and Assessment Department of IKPI, Pino Siddharta explained that the increase in VAT is an effort by the Indonesian government to increase state revenue. This is something that is very important for the community for economic development and the welfare of the people of this country.
Of course, the success of this policy depends heavily on effective and transparent implementation. The government must ensure that additional funds from the VAT increase are actually used for programs that provide direct benefits to the community. In addition, supervision and accountability must be strengthened to prevent misuse of public funds.
On the other hand, the community also has an important role in supporting the success of this policy. Awareness and active participation of the community in paying taxes are the keys to creating a strong and sustainable tax system. Therefore, the government needs to continue to educate the public about the importance of taxes for national development and the benefits they can feel directly.
In a global context, a 1% VAT increase in Indonesia is still considered moderate compared to VAT rates in many other countries. This shows that Indonesia still has room to increase VAT rates without placing too heavy a burden on the public, as long as it is balanced with targeted policies.
With the 1% VAT adjustment policy accompanied by various pro-people assistance programs, national economic resilience and people’s purchasing power are expected to continue to be maintained. Therefore, this program is expected to receive joint support so that it can be realized according to the agreed plan.
)* The author is the Editor of the South Sulawesi Youth Association Media