gerindra

Gerindra Blames PDIP for 12% VAT Hike, PDIP Retaliates

Jakarta – Andre Rosiade, Deputy Chairman of the Gerindra Faction in the House of Representatives (DPR), has weighed in on the issue of the VAT increase to 12%, pinning the blame on the PDIP party.

"Now it seems like PDIP is throwing stones and hiding their hands about the 12% VAT hike, then attacking the Prabowo administration, when in fact, this was their initiative last year. So, PDIP shouldn’t play the victim," Andre told reporters Monday night (22/12/2024).

Andre stated that the Prabowo administration is now faced with implementing the Law Number 7 of 2021 on the Harmonization of Tax Regulations (HPP), which is the basis for the VAT hike. The administration, he asserted, cannot immediately cut the VAT rate because the State Budget for the 2025 fiscal year has already been agreed upon by the government and the DPR period 2019-2024.

The administration, Andre continued, is attempting to enforce the Law while considering the current difficulties faced by the public. According to him, the Prabowo administration is mitigating the Law’s implementation by applying the 12% VAT only to luxury goods, while essential goods remain at the 11% VAT rate.

"Now PDIP, especially Dolfie as the Chair of the HPP Law Drafting Team, shouldn’t provoke the public. Dolfie, you’re the driving force behind the 12% VAT hike," Andre added.

PDIP’s Response

Dolfie Othniel Frederic Palit, Deputy Chairman of the XI Commission of the DPR RI, responded to Gerindra’s accusations blaming PDIP for the approval of the Law Number 7 of 2021 on the Harmonization of Tax Regulations (HPP), which led to the 12% VAT increase. Dolfie explained that the HPP Law was originally an initiative of the government under President Joko Widodo (Jokowi).

"The HPP Law is an initiative of the Jokowi administration, submitted to the DPR on May 5, 2021. At that time, all factions agreed to deliberate on the government’s proposal for the HPP Draft Law," Dolfie said.

Dolfie added that at the time, eight DPR factions, excluding PKS, approved the HPP Draft Law, which was finalized on October 7, 2021. The HPP Law, in the form of an Omnibus Law, amended several provisions of the KUP Law, PPh Law, PPN Law, and Cukai Law, and also established the Voluntary Taxpayer Reporting Program and Carbon Tax.

The government, Dolfie explained, has the authority to propose an increase or decrease in the VAT rate, with a range of 5 to 12 percent. If the Prabowo administration plans to maintain the 12% VAT rate, it must also focus on improving economic performance, creating jobs, and enhancing public services.

"Political Tug-of-War Over PPN 12%: PDIP‘s About-Face Raises Eyebrows

The Indonesian political landscape is abuzz with a heated debate surrounding the impending increase in Value Added Tax (PPN) to 12%, slated for 2025. The harmonization of tax regulations (HPP) law, passed in October 2021, is theLejjidad. However, the finger-pointing game has begun, with each political party trying to distance itself from the unpopular decision.

PDIP’s Rieke Diah Pitaloka recently took the floor at the DPR’s plenary meeting, urging President Prabowo Subianto to reconsider the PPN hike, even suggesting it as a New Year’s gift for the people. She proposes implementing self-assessment monitoring systems in tax management and believes that taxes can be a tool to combat corruption. Her plea has been met with mixed reactions, with some questioning PDIP’s sincerity, given their role in passing the HPP law.

Gerindra’s Wihadi Wiyanto was quick to counter, reminding everyone that the decision to raise PPN lies with the HPP law, a product of the previous DPR period, spearheaded by PDIP. He accused PDIP of having a ‘U-turn’ attitude, now asking for the government to step in. Wihadi further criticized PDIP for their role in initiating the PPN increase, now trying to distance themselves from the decision.

Sara Gerindra, Rahayu Saraswati Djojohadikusumo, added fuel to the fire, expressing her surprise at PDIP’s sudden opposition to PPN 12% when they were instrumental in its initiation during their tenure as chairs of the relevant committee. She questioned PDIP’s motives and genuine commitment to the people’s best interests.

PDIP’s Dolfie Othniel Frederic Palit attempted to deflect the blame, claiming that the HPP law is an Initiative of the Jokowi administration. He highlighted that the law, modeled after an Omnibus Bill, modifies several tax laws and introduces voluntary taxpayer disclosure and carbon tax programs. While acknowledging the government’s right to alter the PPN rate within a 5-15% range, he emphasized the need for balanced economic growth and increased welfare for the people.

As the political wrangling continues, one thing is clear: the PPN 12% increase is seemingly here to stay, barring any unexpected U-turns or political maneuvering. Only time will tell how this tax hike will affect the Indonesian economy and the people’s livelihoods.

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