Caesar Akbar, Jakarta – The Indonesian Consumers Foundation (YLKI) responded to the government's plan to impose a value-added tax (PPN) for staple food or locally known sembako. YLKI regarded the plan as inhuman.

"This is clearly an inhuman policy discourse, especially in the midst of a pandemic when people's purchasing power is dropping drastically," said YLKI Chairman Tulus Abadi in a written statement on Thursday, June 10.

The imposition of VAT, said Tulus, will become a new burden for the public and consumers as staple food prices increase. Not to mention if there is a market distortion that causes higher prices.

The tax could also threaten the food security in the community. "So this plan must be canceled," Tulus remarked.

Instead, the government should be more creative in raising the State Budget (APBN) revenue, for example, by significantly increasing the cigarette tax.

"The potential for increasing the cigarette tax can reach more than Rp200 trillion. Besides, it will bring positive impacts on the lower middle class, meaning that it will reduce their cigarette consumption and allocate [their money] for food," Tulus added.

Previously reported, the government planned to regard basic commodities as objects of taxation. Thus, agricultural, livestock, plantation, and forestry products will be taxable goods subject to value-added tax (VAT) tariffs.

The policy will be noted in the expansion of the VAT object regulated in the revision of Law No. 6 of 1983 on general taxation procedures (KUP).

Source: https://en.tempo.co/read/1471012/ylki-suggests-govt-raise-cigarette-tax-instead-of-staple-foo