Inp.polri.go.id - Jakarta. The House of Representatives (DPR)’s Budget Committee has endorsed a 12% value-added tax (VAT) to support sustainable economic growth starting in 2025.
Committee Chairman Said Abdullah explained on Sunday (8/12/2024) that the policy, part of the 2021 Tax Regulation Harmonization Law, aims to boost state revenue for public programs while creating a fairer and more efficient tax system.
“The 12% VAT ensures a fair tax structure while promoting sustainable economic growth,” he said, as quoted by antaranews.com.
Essential goods such as rice, soybeans, fresh meat, eggs, and vegetables will remain VAT-exempt. Meanwhile, luxury items like cars and high-end properties will be subject to the new rate to increase contributions from wealthier groups.
Although luxury tax revenue has historically accounted for just 1.3% of total tax income, Said acknowledged the potential impact on purchasing power and called for targeted government mitigation strategies.
These include expanding social welfare programs, maintaining subsidies for fuel and utilities, supporting affordable housing, empowering small businesses, and conducting regular market interventions to keep inflation in check.
“Effective mitigation is key to ensuring the policy’s success without burdening vulnerable communities,” Said added.
(mg/inp/pr/nm)