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Govt mulls pushing back VAT hike to roll out social aid first: Luhut
Luhut Pandjaitan, head of the National Economic Council, said a value-added tax (VAT) hike might be pushed back by two or three months as the government seeks to roll out social aid to keep the economy going.
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National Economic Council head Luhut Pandjaitan speaks to reporters after casting his ballot in the regional election in Kuningan, Jakarta, on Nov. 27, 2024. (Courtesy of Kompas.com/Rully Ramli)
A
value-added tax (VAT) hike planned to kick in on Jan. 1, 2025 might be pushed back by two or three months as the government seeks to roll out social aid to keep economic activity going.
Luhut Pandjaitan, head of the National Economic Council, said the postponement was “almost certain” but noted that President Prabowo Subianto would decide on the matter in upcoming government meetings.
“The President doesn’t want people’s burden to increase, so, [the discussion revolves] around how to lessen [that burden], and around the funds needed to get the economy moving,” Luhut told reporters on Wednesday morning, after casting his ballot in Jakarta in the nationwide regional elections.
He explained that, so far, the proposal was to cover the electricity bills of certain households rather than providing direct cash transfers to avoid misuse of the funds, such as for “gambling”.
Households with power supply capped at 1,200 or 1,300 watts, which is generally associated with people on middle incomes, may be eligible for a two- or three-month waiver on their electricity bills, Luhut suggested.
“There are a lot of [funds] in the state budget. [...] I believe there are still a few hundred trillion [rupiah] that can be [used]. There’s no issue there. But the President now wants [aid distribution] to be more efficient, more effective, targeted,” Luhut answered after being asked where the funding would come from.
Only after the aid rollout would the VAT hike commence, said Luhut.
