YLKI Asks Sri Mulyani to Scrap 12% VAT to Protect Consumers

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November 22, 2024 | 01:31 pm

TEMPO.CO, Jakarta - The Indonesian Consumers Foundation (YLKI) expressed strong opposition to the government’s plan to increase the Value-Added Tax (VAT) rate to 12%, scheduled to take effect on January 1, 2025. YLKI argues that this proposed hike by Finance Minister Sri Mulyani Indrawati will further exacerbate the financial burdens faced by consumers.

“The previous VAT hike in April 2022, from 10% to 11%, has already significantly impacted the public. A further increase to 12% in 2025 will only erode consumer purchasing power,” YLKI stated in a written statement.

According to YLKI, this policy will disproportionately affect individuals struggling with economic hardship. The organization also predicts that consumers may delay or even cancel purchases of high-VAT items, such as electronics, clothing, and household appliances.

“In an era when people are experiencing declining incomes and rising prices for essential goods, a VAT increase will surely place an additional burden on the public,” YLKI emphasized.

The organization also highlighted the potential negative consequences for businesses and industries, which may experience decreased sales and sluggish economic activity. Thus, YLKI urges the government to reconsider or even abandon the proposed VAT increase.

As an alternative, YLKI suggests that the government explore other revenue-generating measures, such as increasing taxes on cigarettes and sweetened beverages. These measures not only have the potential to boost government revenue but also contribute to public health initiatives.

“The government instead refrains from increasing taxes on cigarettes and sweetened beverages, which could serve as an alternative source of revenue without imposing additional burdens on the public,” YLKI said.

Furthermore, YLKI highlights the injustice in the tax collection process so far, criticizing the leniency towards tax evaders and calling for stricter enforcement of tax regulations.

“Instead of raising VAT, the government should prioritize improving tax compliance among large businesses and tax evaders, so that the tax burden is not unfairly shifted onto ordinary citizens,” YLKI stressed.

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