Sri Mulyani Says The 11 Percent VAT Increase is Not Excessive

JAKARTADAILY.ID - Under the Law on the Harmonization of Tax Regulations or UU HPP, the Value Added Tax or VAT will be raised to 11 percent on April 1, 2022.

According to the Minister of Finance Sri Mulyani Indrawati, 11 percent VAT is still below the world average VAT. Thus, the 1 percent increase from the previous VAT is still considered to be not excessive.

"The average VAT worldwide is at 15 percent. If we look at OECD countries and others, Indonesia is at 10 percent, we will increase it by 11 percent," said Sri Mulyani.

Sri Mulyani further explained that her staff is considering raising the VAT by 12 percent in 2025.

"It'll be 12 percent in 2025," she said.

Sri Mulyani conveyed that the pandemic issues bring the current focus of entrepreneurs to economic recovery. However, this matter doesn't stop the government from keeping on the VAT.

Moreover, the state budget during the Covid-19 pandemic often issues large budgets. Hence it needs to be reorganized.

"So we will see where there remain a space [to reorganize the budget] where Indonesia is equivalent to OECD," said Sri Mulyani.

Sri Mulyani explained that taxes from an economic perspective require cooperation because the community will reuse their taxes.

"Obviously we still need better education, better health, we even need our army to be stronger, [and] quality police officers. Thus, our legal standing and security are well. All of that [the economic goals] can be done. We are achieving and building it step by step, [but] it require strong taxes grounds," said Sri Mulyani.

The article was translated from Pikiran-Rakyat.com's article titled "PPN Naik Jadi 11 Persen Mulai April 2022, Menkeu Sri Mulyani: Tidak Berlebihan".

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