Harming the People, YLBHI and CELIOS Sue for a 12% VAT Increase,

JAKARTA, The government's policy of increasing VAT by 12% is considered a serious attack to the constitution. Therefore, the Indonesian Legal Aid Foundation (YLBHI) together with CELIOS are urging the Probowo Subiyanto government to cancel the VAT increase. 

 

"The government and DPR must revise the calculation of the 12% VAT rate in Law Number 7 of 2021 concerning Harmonization of Tax Regulations (HPP) before January 1 2025," said a press release received by the ADILNEWS Editorial Team on November 29 2024.

Furthermore, YLBHI and Celios asked the government to evaluate the jumbo budgets of ministries and institutions, especially the police. Apart from that, they urged the government to increase the space for public participation in discussions on state finances. 

"It is necessary to implement fair tax policies such as: wealth tax, windfall tax, extractive commodities, coal production tax and carbon tax," he explained. 

Closing tax leaks in the palm oil sector and cross-border digital company transactions is also considered by YLBHI and CELIOS as a tax option that can be implemented by the government. "There is a need to reform the tax system, such as expanding the tax base and increasing collection efficiency," he said.

Not to forget, the government is deemed to need to encourage the informal sector to become formal, which has a greater impact on expanding the tax base, such as: MSME PPh incentives of 0.1-0.2%. 

Also review the state expenditure of trillions of rupiah that was wasted on stalled PSN projects and state capital participation in BUMN which was proven not to produce added value and competitiveness. 

Misguided Policy: 

The 12% VAT increase effective January 1 2025 is, for YLBHI and CELIOS, a misguided policy. Pretext Increasing economic growth and overcoming poverty are considered manipulative reasons. 

The results of the CELIOS study reveal that the 12% VAT rate policy risks reducing GDP (Gross Domestic Product) by up to IDR 65.3 trillion, reducing total household consumption by IDR 40.68 trillion. This means that 12% VAT will threaten the economy in 2025. The increase in the VAT rate from 11% to 12% also increases workers' expenses by IDR 357 thousand per month.

“The increase in VAT to 12% increases the expenditure of the poor by IDR 101,880 per month, worsening their economic condition. This causes the vulnerable poor groups to experience an additional expenditure burden of IDR 153,871 per month, and threaten their ability to survive," he explained.

This policy will also cause the middle class group to experience an increase in expenditure of IDR 354,293 per month. Thus exacerbating the phenomenon of the decline of the middle class into the middle class prone to.

Other impacts also hit Gen Z. According to him, a 12% VAT increase could trigger social problems such as divorce rates due to economic reasons, and mental health stress for Gen Z. Z. "Per year, Gen Z has to pay IDR 1.75 million more because of the difference in VAT rates compared to the previous year. "Gen Z, in terms of age, is the most disadvantaged by the increase in VAT rates," he continued. 

For this reason, they suggest that instead of increasing VAT, the government still has other state revenue alternatives that do not burden the poor, such as wealth tax, coal production tax, commodity windfall tax, and implementation of a carbon tax. 

Potential income from covering tax leaks in the palm oil sector amounting to IDR 300 trillion and digital tax leaks (over the top companies) are also considered much more significant in increasing the tax ratio.

According to Wahyudi Askar, Director of Fiscal Justice CELIOS, in a simulation carried out by his institution, a 12% VAT increase would cause an increase in the expenditure of the poor group by Rp. 101,880 per month, an increase in the expenditure of the vulnerable poor group by Rp. month, posing a threat to the economy by reducing GDP by IDR 65.3 trillion, and decreasing household consumption by IDR 40.68 trillion, thereby suppressing economic growth. 

"At this point the 12% increase in PNN is not actually increasing state income but is actually causing social problems. In this matter, the issue of increasing VAT by 12% has become a constitutional problem that threatens public life in various sectors, education, economy, employment, environment, law enforcement, including a fundamental problem, namely the increasingly narrow democratic climate. "Meanwhile, the government has a constitutional mandate to improve the welfare of all its citizens," explained Wahyudi Askar.

Link Terkait :

https://adilnews.com/ekonomi-bisnis/rugikan-rakyat-ylbhi-dan-celios-gugat-kenaikan-ppn-12/