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.