Heaptalk, Jakarta — Coordinating Minister for Economic Affairs Airlangga Hartarto stated that the increase in value-added tax (VAT) from 11% to 12% will affect inflation, although not significantly.
“I emphasize that the VAT increase is only 1%, not 12%. Hence, VAT increases by 1%; it’s wrong to say VAT increases by 12%; VAT increases by 1% from 11 to 12, not from 0 to 12. This must be clear. The impact on inflation exists but is not high,” said Airlangga in Tangerang on Sunday (12/22).
Therefore, to boost public purchasing power when VAT increases, the government will issue multiple stimulus packages in 2025, such as reductions in electricity costs, housing, and vehicle purchases.
Airlangga explained, “We will certainly look at purchasing power next year. The government will issue various stimulus packages, including 50% electricity payments from January to February. Then, for housing purchases, VAT will be borne by the government up to Rp2 billion to Rp5 billion. This ensures the government pays attention to what the middle class buys. For vehicles, the government will still cover motorcycles, especially electric ones.”
This is expected to reduce carbon emissions in Jakarta and other regions in Indonesia. Electric and hybrid cars also receive a 3% discount. Airlangga ensured that premium rice prices would not increase. The government continues to provide food assistance to the public every two months. “Premium rice is part of rice. Premium rice is not subject to VAT. Premium rice is not subject to 12% VAT,” he concluded.
