JAKARTA – The issue of a 12 percent increase in Value Added Tax (VAT) as of January 1, 2025 had burst into the public conversation. Although it was canceled, this phenomenon has left a pessimistic attitude towards tax assessment by the majority of Indonesians.
One of them is shown by the emergence of the “Tax versus Zakat” narrative. People compared the two provisions. So, how far is the impact of both for the welfare of the community?
This Kata Pakar article discusses tax and zakat in the view of Yusuf Wibisono, a researcher from IDEAS (Institute for Demographic and Poverty Studies). Until recently, he served as Director of Next Policy and Lecturer at FEUI (Faculty of Economics, University of Indonesia).
He has also studied macro and regional economics since 2000 and Islamic economics since 2004 with specialization in Islamic financial monetary economics and Islamic public finance.
Getting to Know Tax and Zakat with Yusuf Wibisono
According to Yusuf Wibisono’s explanation, tax and zakat are the withdrawal of public assets aimed at improving public welfare. Tax and zakat are in different domains. The state – in the context of Indonesia, is very legitimate in implementing tax policy. Zakat is also a valid sharia for Muslims in Indonesia.
Yusuf explained that zakat is the collection of assets for Muslim citizens who are well-off and the proceeds are intended for beneficiaries. The recipient requirements are specific: fakir, poor, converts, amil, people who are in the process of freeing themselves – in the sense that they are entitled to be empowered, gharimin or people who are in debt, fi sabilillah or people who are fighting in the way of Allah, and ibnu sabil or people who are studying.
The amount is also fixed. For zakat fitrah, it is equivalent to 2.5 kilograms of staple food in each region and zakat mal (wealth) is 2.5 percent of income.
Meanwhile, tax is the collection of assets in the form of money for citizens. Its withdrawal also comes in various lines. For example, income tax, whose amount is determined by a citizen’s income. VAT, which is currently 11 percent of the consumption of goods and services. PBB, a tax for owners of mining land, plantations, rice fields or fields. Or PPnBM, which is a levy for the sale of luxury goods.
Read also: Paying Zakat off in LAZ Can Reduce Tax Paying Obligations, How Do You Do It?
To what extent are tax and zakat useful?
Before looking at the benefits of tax and zakat, Yusuf explained the data that currently Indonesia’s poor people amount to 35 percent of the population. Then 40 percent are vulnerable to poverty or middle class candidates and more than 20 percent of the middle class. One percent of the upper class or elite. This means that many Indonesians are still on the verge of uncertain economic status.
The recent uproar about the discourse on increasing VAT to 12 percent is certainly an unfair policy for the majority of people. Although canceled, this is still a frightening specter.
The data above shows that consumers of goods and services in Indonesia are still dominated by the lower class. Reflecting on the increase in VAT from 10 percent to 11 percent in 2022, it created a shrinkage in the number of middle-class residents from 56.2 million people or 20.68 percent to 52.1 million people or 18.83 percent (as of March 2021-March 2023).
Looking at neighboring countries-Singapore and Malaysia-where the population has a higher level of welfare than Indonesia, even only a VAT rate of 8-10 percent is imposed.
“This is exactly the opposite of increasing welfare (of the community). VAT is high, even though it is clear that it targets more lower-class consumers. Meanwhile, taxes for mining or coal owners are still undertaxed (low tax value), even some are tax-free. This kind of policy is what I really regret. There is no principle of justice,” said Yusuf.
In contrast to zakat which is intended directly to the beneficiaries, the results of tax collection are prioritized to build state resilience. Namely paying interest on state debt, paying salaries for government officials and then finally for the people.
“Indeed, (tax) is different from zakat. The priority (zakat) is intended for direct beneficiaries,” Yusuf said on Monday (30/12/2024).
Read also: Zakat on Income, To Whom Should It Be Given?
So, is there a solution to this tax problem?
Yusuf emphasized that there should be legal reform on taxation so as not to burden the community. Tax revenue should be greater from citizens who belong to the upper class.
“There should be more withdrawals from large economic actors, the palm oil, mining, or coal sectors. We don’t want to pay taxes, but it should be a fair (policy),” Yusuf said.
In addition, the civil society movement must also be strengthened. A collective network that has the awareness to help others is also needed in the midst of this polemic.
Yusuf Wibisono’s response to Dompet Dhuafa’s activism as a zakat-based humanitarian organization
“Dompet Dhuafa’s programs and initiatives are good. Moreover, they are implemented in various sectors. There are economy, education, health, socio-culture, and da’wah,” Yusuf said via Google Meet.
According to him, Dompet Dhuafa has activated a strong and comprehensive community movement. He divided it into three time frames: short, medium, and long term.
First, in the short term, he compares Dompet Dhuafa to a firefighter who saves as many people in need as possible. Both in the form of directly targeting beneficiaries.
Especially today, he continued, there are increasingly massive cases of the decline in the economic class of the middle class to lower. Often, these groups of people are not registered as recipients of government social assistance (bansos), due to inadequate data collection.
Second, the medium term. After direct assistance, the community must be empowered. So that their economic life is not too dependent on outsiders.
In the economic field, it can be in the form of empowerment programs for individual ultra-micro-enterprise MSME players, or empowerment in the form of groups. In this case, Dompet Dhuafa has initiated many empowerments in various sectors. Starting from education, health, culture, to da’wah.
“Finally, long-term. By creating advocative programs,” Yusuf said, Monday (30/12/24).
According to him, this can be done by advocating for policies that favor the poor. He reminded us that poverty does not happen by itself. That poverty occurs due to the implementation of policies that are less strategic. Internal institutional studies must rise to the macroeconomic level, he said.
“I give an example, for example, providing assistance to residents who have not registered for social assistance or BPJS. So that the data is recorded in the government,” said the researcher who also often writes in the Tempo newspaper column.
Dompet Dhuafa as a humanitarian organization engaged in zakat management certainly has a big role. Zakat management is implemented in various sectors: economy, health, education, socio-culture, and da’wah. The hope is that Dompet Dhuafa can alleviate or delay economic bankruptcy among the community. (Dompet Dhuafa)
Text and photo: Hany Fatihah Ahmad, DDTV
Editor: Dhika