The Purchasing Power Is Declining, Causing Concern Within The Tourism Industry Regarding The 12 Percent Value-added Tax

ANTARA FOTO/ ICom/AM IMF-WBG/Nicklas Hanoatubun

The Purchasing Power Is Declining, Causing Concern Within The Tourism Industry Regarding The 12 Percent Value-added Tax

Monday, 25 Nov 2024

The Indonesian public is currently stirred by the announcement of an increase in the Value Added Tax (VAT) to 12 percent, set to take effect on January 1, 2025. The Indonesian Tourism Industry Association (GIPI) has expressed their concerns regarding this development.

Hariyadi Sukamdani, the Chairman of GIPI, emphasized that the government should prioritize job creation to enhance national revenue, rather than resorting to raising the VAT.

"The new government will make decisions, but from the beginning, we have always believed that the most crucial aspect is not to manipulate fiscal policies but to focus on creating a substantial number of jobs," stated Hariyadi during the opening of the Wonderful Indonesia Tourism Fair (WITF) 2024 in Jakarta on Wednesday, October 2.

He candidly addressed the recent decline in public purchasing power, remarking, "We are discussing fiscal matters, yet the reality is that purchasing power is decreasing. When purchasing power declines, it indicates that people are unemployed."

"In my view, the focus should not be on fiscal pursuits. If economic growth is achieved, tax revenues will naturally increase," he added, as reported by Detik on Thursday, November 21.

According to Hariyadi, the tourism sector could serve as a catalyst for economic growth, as it has a direct impact on the livelihoods of the community.

He remarked, "It is quite ironic. Regardless of the reasons, the decline in purchasing power does not reflect that economic growth can indeed improve the welfare of the broader population. This is something we must acknowledge."

"That is why I repeatedly emphasize the importance of prioritizing tourism. When tourism flourishes, it creates jobs, and the community benefits financially. This, in turn, positively affects economic growth and purchasing power," he elaborated.