VAT Still 11%: True, But Late

By Fahmi Alfansi P Pane

Finally, Government of Indonesia decided to maintain tariff of Value-Added Tax (VAT) still at 11%. The decision which declared on the last day of 2024 will stipulate new tariff 12% only for luxurious goods that previously imposed as Sale Tax on Luxury Goods.

However, the decision looks was taken in short time. It’s not decision based on long-term planning as Law on Tax Harmonization was stipulated in 2021. It takes by emergent approach with observing current people’s burden before VAT raise to 12%.

At one side, President Prabowo has showed himself as popular leader. He listens people voice. He feel what the common feel, even seeing raising unemployment around the country. He desire not to add people’s burden.

However, at other side, the price of goods has been rising, including staple foods, except rice because under control of government. Actually, every end of year the price of goods always rising, so that the plan to uplift the tariff of VAT will legitimize the rising of price.

Moreover, since years before there is phenomenon of shrinkflation. It means the quantity of products will be reduced at fixed price, but gradually the price will increase.

However, the decision is true, but should be taken and declared before rising of goods price. Furthermore, what’s the fate of economic stimulus, such as discount of electricity payment in January 2025?