By: Anindira Putri Maheswani)*
The government’s decision not to increase the Value Added Tax (VAT) rate to 12 percent is good news for the wider community. Finance Minister Sri Mulyani Indrawati, through her personal Instagram account, emphasized that the VAT rate remains at 11 percent for goods and services, except for luxury goods. This step is clear evidence of the government’s commitment to the people and shows deep concern for the economic conditions of the community.
This statement came after the 2024 State Budget Cash Closing Meeting and the launch of the Core Tax system at the Ministry of Finance, which was also attended by President Prabowo Subianto. In her explanation, Sri Mulyani answered the growing public doubts regarding the possibility of a VAT increase. She emphasized that goods and services that have been exempt from VAT will remain so, in accordance with Government Regulation Number 49 of 2022. In addition, goods and services subject to a VAT rate of 11 percent will also not experience an increase.
This decision was taken by considering the condition of the community who are still struggling to face the challenges of the global economy. The government decided to increase the VAT rate only for luxury goods groups that have been subject to Luxury Goods Sales Tax (PPnBM). Goods included in this category include private jets, cruise ships, yachts, luxury houses or apartments worth more than IDR 30 billion, and high-end motor vehicles. Thus, only the wealthy community will be affected by this policy, while the majority of the people will not feel the change.
President Prabowo Subianto firmly stated that the increase in VAT rates only applies to goods and services consumed by the upper class. This policy also confirms the President’s commitment to protecting the purchasing power of the lower middle class. This bias is in line with the grand vision of inclusive and equitable economic development, where no group of people is left behind.
The government’s move has received widespread support from various groups, including the MPR RI Leader Eddy Soeparno. He considered that this policy shows President Prabowo’s consistency in prioritizing the interests of the people. Eddy called this decision real evidence that the President hears and responds to the aspirations of the people conveyed through various channels, including social media and petitions. According to him, this policy reflects the spirit of “no one is left behind,” where welfare is the right of all levels of society.
Furthermore, this policy also reflects the government’s proactive approach in listening to the voice of the people. In an era where communication between the government and the people is increasingly open, President Prabowo shows that conveying aspirations has an important place in decision-making. By providing space for healthy democracy, this policy is proof that the voice of the people is truly heard and translated into concrete steps that side with the people.
In addition, Sri Mulyani also emphasized that taxes are an important instrument to create social justice and mutual cooperation. By focusing the tariff increase only on luxury goods, the government has succeeded in maintaining a balance between the need for state revenue and protection of people’s purchasing power. This step not only protects vulnerable groups but also ensures that the tax burden is more proportional, in accordance with the economic capabilities of each level of society.
The decision not to raise VAT across the board also has a positive impact on economic stability. With no additional tax burden, people can remain focused on their economic recovery without worrying about losing purchasing power. This policy is expected to encourage household consumption, which is one of the main pillars of national economic growth.
On the other hand, the implementation of a 12 percent VAT rate for luxury goods is the right step in ensuring contributions from the wealthy community. This policy also serves as an effort for fair redistribution, where revenue from luxury goods tax can be used to finance programs that have a direct impact on the wider community, such as education, health, and infrastructure.
The government’s move to prioritize the interests of the people shows that taxes are not just a tool to collect state revenue, but also a reflection of justice and mutual cooperation. The government’s courage not to increase the VAT rate to 12 percent across the board is clear evidence that fiscal policy can be designed with an inclusive approach and oriented towards the welfare of the community.
This policy deserves to be appreciated as a strategic step that sides with the people while strengthening public trust in the government. The decision not to increase VAT to 12 percent not only protects people’s purchasing power, but also shows the government’s commitment to building a just economy. Let us support this pro-people government step, while continuing to provide constructive input for the sake of creating a better Indonesia.
)* The author is a contributor to Persada Institute