DIGIVESTASI - Indonesian National Economic Council Chair Luhut Binsar Pandjaitan Signals Potential Delay for 12% VAT Implementation, Luhut Binsar Pandjaitan, Chair of the Indonesian National Economic Council, announced that the planned implementation of a 12% Value-Added Tax (VAT) might be delayed. The postponement would allow the government to provide social assistance or stimulus to middle- and lower-income communities impacted by the policy.

Luhut emphasized that implementing the 12% VAT should be accompanied by adequate stimulus to mitigate its effects on the public. Initially, the VAT was scheduled to take effect on January 1, 2025.

“The 12% VAT must be preceded by stimulus for economically vulnerable citizens. Currently, the timeline is still under review—perhaps two or three months,” Luhut stated during his visit to TPS 004 in Kuningan Timur, South Jakarta, on Wednesday (November 27, 2024).

With the planned social assistance measures, the policy is likely to be delayed. However, the final decision will rest with President Prabowo Subianto.

“It seems it will be postponed. What’s important is that the stimulus is rolled out first,” Luhut added.

Planned Stimulus Includes Electricity Subsidies

The proposed stimulus includes electricity subsidies. Luhut explained that assistance would be delivered via electricity bills rather than direct cash transfers to prevent potential misuse.

“The assistance will be tied to electricity bills, not given directly to the public, to avoid misuse. This is the preliminary proposal, but it will be finalized later,” he explained.

The National Economic Council is currently determining eligibility criteria for electricity subsidies, focusing on household electricity capacity thresholds.

“The electricity data is comprehensive. For instance, households with a capacity of 1,300 to 1,200 watts or below might qualify. We are assessing cases such as those with overdue bills of 2–3 months,” he elaborated.

Sufficient Budget to Support Assistance

Luhut assured that the national budget is sufficient to support the aid program, citing strong tax revenue as providing ample fiscal space.

“The budget is substantial, and our tax revenue is robust. There are hundreds of trillions of rupiah in the state budget that can be utilized,” he said.

He emphasized that President Prabowo is committed to ensuring the policy does not burden the public and instead aims to stimulate economic activity at the grassroots level.

Economic Challenges Considered

Meanwhile, Jodi Mahardi, spokesperson for the National Economic Council Chair, confirmed that the policy remains under in-depth review.

“We would like to emphasize that this policy is undergoing thorough evaluation,” Jodi told the media.

He also highlighted global and domestic challenges, such as the election of Donald Trump as U.S. President, China's economic slowdown, and declining purchasing power among middle- and lower-income groups.

“The government remains committed to fostering inclusive and sustainable economic growth amid global and domestic challenges,” he stated.

Jodi noted that economic policy evaluations, including the 12% VAT plan, are being conducted comprehensively to align with both national and global economic conditions.

“This policy is still under review to ensure its implementation supports economic stability and sustainability,” Jodi concluded.