The Indonesian government has decided to postpone the implementation of the 12% Value-Added Tax (VAT) rate, which was initially planned to take effect on January 1, 2025.
This decision was made as a precautionary measure to ensure the policy does not negatively impact middle- to lower-income communities. The government is preparing a stimulus to safeguard economically vulnerable groups before the policy is enforced.
Stimulus Plan Focused on Electricity Subsidies
One of the proposed stimulus measures involves subsidies for electricity tariffs, specifically for customers using 1,300 to 1,200 Watts. This assistance will help households with outstanding electricity payments from the past few months.
Providing the subsidy directly through electricity tariffs is considered more targeted and less prone to misuse than direct cash assistance.
Adequate National Budget Allocation
The state budget is reported to be in a robust position to support this initiative. With tax revenues steadily increasing, the government has sufficient resources to allocate funds through the National Budget (APBN).
Authorities ensure that the available funds are adequate to finance the stimulus while prioritizing efficiency and effectiveness in distribution.
Balancing National and Public Interests
The delay in implementing the 12% VAT reflects the government’s effort to balance the nation’s need to increase revenue with the importance of protecting citizens’ purchasing power. This approach aims to allow economically vulnerable groups to adapt to the changes without being excessively burdened.
The government emphasizes that the policy will only be finalized once all stimulus schemes are thoroughly designed, ensuring its implementation is effective and genuinely beneficial to the people.
