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December 30, 2024 | 07:45 pm
TEMPO.CO, Jakarta - Public opposition continues to mount against the government's plan to impose a 12 percent Value Added Tax (VAT). The Jogja Memanggil Alliance took to the streets in Yogyakarta on Monday, December 30, 2024, to voice their strong rejection of the plan.
Protesters were seen marching from the Abu Bakar Ali parking lot along Jalan Malioboro to the zero-kilometer point in Yogyakarta.
In addition to presenting several demands, the Alliance called upon citizens across Indonesia to take direct action by surrounding local tax offices and, for those in Jakarta, the State Palace.
Karma, spokesperson for the Jogja Memanggil Alliance Action, emphasized that the VAT increase would indiscriminately affect all segments of society, from the poor and middle class to the super-rich.
“The increase in VAT rates will be followed by an increase in the prices of goods that have been consumed daily by the public,” he stated.
The Alliance expressed deep regret over the planned policy. They argued that implementing a 5 percent VAT rate is legally permissible under existing Indonesian law.
They cited Law Number 7 of 2021 concerning Harmonization of Tax Regulations (HPP), specifically Article 7 Paragraph 3 Chapter 4 IV, which stipulates that the VAT rate can range from 5 to 15 percent.
“This regulation can be implemented through a Perpu (Government Regulation in Lieu of Law) if President Prabowo Subianto is more in favor of the lower middle class,” Karma asserted.
The Alliance believes that this policy will place a significant financial burden on the public, particularly the lower middle class, starting in 2025 and continuing in subsequent years, eroding savings and depleting disposable income.
“So in this action, we demand that the Indonesian Government cancel the 12 percent VAT rate increase and encourage the implementation of 5 percent VAT,” Karma declared.
Furthermore, the Jogja Memanggil Alliance urged that the proposed VAT increase be replaced by a tax on the wealthy, as an alternative revenue source amidst shrinking fiscal space and the ongoing economic challenges faced by the lower middle class in Indonesia.
Citing data from the Central Statistics Agency (BPS), the Alliance noted a decline in public purchasing power between May and September 2024, coupled with widespread layoffs in the formal industrial sector, contributing to rising unemployment.
“Taxing the wealth of 50 super-rich people in Indonesia will potentially contribute Rp81.56 trillion per year. This value is greater than the potential income of Rp75 trillion if a 12 percent VAT is applied,” Karma explained.
Karma further clarified that the Rp75 trillion figure was derived from government estimates, which he characterized as being overly optimistic about the financial capacity of the 650 wealthiest individuals. “As if people's purchasing power in 2025 is perceived to be the same as their purchasing power in 2023,” he commented.
He countered this assumption by pointing to widespread layoffs and the ongoing trade war between major global powers, both of which are contributing to rising prices for essential goods.
“Implement a wealth tax and eliminate allowances for public officials,” he demanded.
The protesters called on the public to engage in similar actions in their respective cities. “Surround the tax office in your area, and surround the State Palace for those in Jakarta until the VAT increase is canceled and reduced to 5 percent,” the protesters chanted.
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