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Opposition, ruling coalition trade blame over 12% VAT hike
In late October 2021, the House’s plenary session passed the tax bill stipulating the VAT hike in 2025 with the support of eight political parties, including the PDI-P, Gerindra and Golkar.
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Gaggle of shoppers: Crowds of people visit a shopping mall on April 9, 2023 in Serang, Banten. (AFP/Dziki Oktomauliyadi)
T
he Indonesian Democratic Party of Struggle (PDI-P) and the ruling Onward Indonesia Coalition (KIM) are trading culpability over an upcoming hike on the value added tax (VAT) which is set to take effect in January 2025.
Politicians from former president Megawati Soekarnoputri’s PDI-P have expressed dismay at the government’s move to raise the principal consumption tax rate from 11 percent to 12 percent, calling the timing of the policy disastrous.
Former Central Java governor Ganjar Pranowo of the PDI-P, warned that the VAT increase was poorly timed and ill-advised, arguing it would cause middle- and lower-income earners to cut back on consumption, dip into their savings or even take on more debt.
“This measure, meant to cure economic issues, might instead cause complications,” said Ganjar in a video on his YouTube channel on Dec. 18.
Other prominent PDI-P figures, including the House of Representatives Speaker Puan Maharani and former Jakarta governor Basuki “Ahok” Tjahaja Purnama, echoed these concerns.
“Many are already under economic pressure. Some have even fallen into predatory online lending with exorbitant interest rates. We hope no further economic pressures will be imposed on the public,” Puan said on Dec. 19, as quoted by Kompas.com.
Meanwhile, political parties under the KIM Coalition, which is led by President Prabowo Subianto’s Gerindra Party, have criticized the PDI-P for shifting the blame despite the party’s support for the 2021 Harmonization of Tax Regulations Law that stipulated the VAT hike next year.
