Jakarta, – The Indonesian government is committed to embracing academic groups and various related parties in an effort to maximize economic growth after the 1% increase in Value Added Tax (VAT). This is done to ensure the sustainability and stability of the national economy amidst changes in taxation policy.
Coordinating Minister for Economic Affairs, Airlangga Hartarto, explained that the 1% increase in VAT rates is not a unilateral government decision, but rather a mandate regulated in the Law on Harmonization of Tax Regulations (UU HPP). “Article 7 paragraph 1 of the HPP Law states that this new VAT rate will apply no later than January 1, 2025,” said Airlangga.
In this context, the government also shows concern for low-income communities. “The government will cover the needs of other food items affected by the 1 percent VAT increase for low-income communities,” he added. This step is expected to mitigate the impact of the VAT increase on the most vulnerable economic groups.
Head of the Communication and Information Services Bureau of the Ministry of Finance (Kemenkeu), Deni Surjantoro, emphasized that every VAT rate adjustment policy has gone through an in-depth discussion process between the Government and the House of Representatives (DPR). “The 1 percent VAT rate adjustment policy must have considered various aspects, including economic, social, and fiscal,” said Deni. He added that transparency and collaboration with various stakeholders including academics are very important to create a solution-oriented policy.
Deputy Speaker of the Indonesian House of Representatives, Sufmi Dasco Ahmad, also said that the implementation of the 1 percent VAT increase will be carried out selectively. “The 1% VAT increase will only be imposed on luxury goods that are selective. Meanwhile, for basic goods and services that directly touch the community, they will still be subject to 11% tax,” he said.
With an inclusive and evidence-based approach, the government is optimistic that this policy will have a positive impact on economic growth. The government hopes that cooperation with academic groups can explore innovative ideas and solutions that support the smooth implementation of this new VAT, as well as maintain long-term benefits for the community and the Indonesian economy as a whole.
The government remains committed to ensuring that all policies taken are oriented towards people’s welfare and sustainable economic growth. [*]