Hendro D – Situmorang, Muhammad Aulia Rahman, Jakarta. The Information Commission on Monday urged the government to reconsider its plan to raise the Value Added Tax (VAT) to 12 percent, which will take effect in January 2025.

The commission pointed to a lack of effective dissemination of information about the tax hike that will have widespread effects on people's welfare and economic conditions.

Rospita Vici Paulyn, a commissioner with the Information Commission, said the public must get clear and transparent information regarding the tax hike implications.

She argued the national economy has yet to fully recover from the pandemic, with a significant number of layoffs and a decline in formal employment. The absence of public participation in the policymaking process is another reason for the postponement or even cancellation of the planned tax hike.

"The government must be open and transparent about regulations and policies that affect the public, especially regarding the VAT hike, both in delivering the plan, dissemination of information, and its implementation, which will take effect on January 1, 2025," she said at the Central Information Commission office in Jakarta.

The commission also emphasized the importance of conducting a comprehensive study and extensive public communication before this policy is implemented.

"The government needs to explain whether the increased VAT will be fully utilized. This will impact the lower middle class, who will bear the brunt of the planned 12 percent VAT," she added.

Rospita said the VAT increase could significantly affect household expenditures, reduce company production performance, increase layoffs, and discourage investors. The greatest impact will be felt by the lower-middle class.

"The government needs to conduct a comprehensive study and carry out massive dissemination of information before implementing it. Especially since the economy has not yet shown signs of stability post-pandemic. Layoffs are widespread, and formal jobs are shrinking," said Rospita.

Furthermore, the public has the right to know how the revenue from the VAT increase will be used and ensure that the tax funds will genuinely provide maximum benefits for the public, she said.

Source: https://jakartaglobe.id/business/planned-vat-hike-lacks-public-support-govt-tol