Jakarta – Deputy Chairman of the Indonesian House of Representatives for Economic and Financial Coordination, DR. IR. H. Adies Kadir, SH, MHum, emphasized that the policy of increasing the Value Added Tax (VAT) rate by only 1% is an implementation of the mandate of the law which aims for the welfare of the people. What needs to be underlined is that this VAT increase does not apply to all types of goods and services.
“This policy is good for equitable development and to strengthen our economy as the President (Prabowo Subianto) aspires. The luxury consumer group, most of whom come from the upper class, has very high purchasing power. Thus, those who are most capable contribute more to the country,” said Adies.
It is important to understand that this 1% increase is only applied to luxury goods that are generally consumed by the upper class. Meanwhile, basic necessities, social services, education, health, MSME products, and the agricultural sector remain exempt from this increase.
“The increase in VAT on luxury goods can be likened to a consumption tax for the rich. This group pays more because they get more facilities and access. The proceeds from the taxes they pay will later be used to fund social programs that benefit people in need,” added Adies, who also serves as the General Chairperson of the DPP Ormas MKGR.
The additional revenue from the VAT adjustment will be allocated to various development programs, including infrastructure, improving the quality of education, health services, and social assistance programs aimed at low-income communities. This is part of the government’s strategy to realize better economic equality.
This policy reflects the government’s commitment to creating a fairer and more equitable taxation system, where those with higher economic capacity can contribute more to national development. With this approach, it is hoped that a positive impact can be created on the national economy and the welfare of society as a whole.
“The funds can be channeled for infrastructure development, improving the quality of education, health and other social assistance programs that support low-income groups. Then, the funds collected can be used for social programs that improve the quality of life of the Indonesian people as a whole,” concluded Adies.
The government under the leadership of President Prabowo Subianto has taken strategic steps to strengthen the national economy by adjusting the Value Added Tax (VAT) rate to only 1%, namely from 11% to 12%. This policy is specifically designed to create better economic equality in Indonesia. [*]