VAT on Basic Needs: Poverty Surge Threatens

There are three tariff options for this basic need. First, the general VAT rate proposed by the government is 12%.

Second, a low tariff is imposed in accordance with the multi-tariff scheme formulated by the fiscal authority, namely 5%, which is legalized through the issuance of a Government Regulation (PP). Third, using the Final VAT rate proposed by the government of 1%. So far, most of the basic necessities needed by the community are not subject to VAT. These goods include rice, grain, corn, sago, soybeans, salt, meat, eggs, milk, fruits and vegetables. This provision is contained in Law no. 42/2009 concerning the Third Amendment to Law no. 8/1983 concerning Value Added Tax on Goods and Services and Sales Tax on Luxury Goods. Director of the Center of Economic and Law Studies Bhima Yudhistira assesses that the implementation of VAT for basic needs that is not balanced with social assistance will increase the poverty rate. This is because food supplies account for 73.8% of the total component of the poverty line. “The sensitivity of food prices to the number of poor people needs to be observed. Purchasing power can immediately drop and is counterproductive to efforts to reduce poverty during the pandemic," he said. Another risk that also needs to be considered by the government in formulating this policy is an uncontrolled spike in basic needs inflation. “The impact is a risk of increasing basic needs inflation. Basic goods that were previously excluded from VAT objects are then subject to VAT, the price will increase," he said.

|•SOURCE•| Image :trustorrun |

READ MORE

|• NATIONAL •|JOKOWI Changes UI Statute
|• INTERNATIONAL •|The Woodcutter Was Attacked by TIGER
|• BANKING •|the-Fate Of Office Property Business
|• POLITICS •|Limited Subsidized Housing Budget
|• SCIENCE •|Through Education, ETF Preserves Eka Tjipta Widjaja's Life Philosophy