Penalty Kick on Food VAT

Portugal won 3-0 over Hungary in the Euro 2020 (Euro 2021) group stage match at the Puskas Arena Stadium, Budapest, Tuesday (15/6) evening Indonesian time. Cristiano Ronaldo scored three goals, one of which came from a penalty kick in the 87th minute. Execution of the player nicknamed CR7 to the left side of the goal outwit goalkeeper Gulacsi who moved to the right.

In a book called “Think Like a Freak” written by Steven D. Levitt and Stephen J. Dubner, it is written this way: Most footballers are right-footed kickers. This means that a shot towards the left corner of the goal on a penalty kick is a stronger shot than a shot into the right corner. Of course the goalkeeper knows that. That’s why based on research, 57% of goalkeepers jump to the right (left of the kicker) and only 41% to the left. That means, the goalkeeper only stands in the middle (does not jump left or right) only 2%.

Then, still according to the book, a shot into the middle of the goal is significantly more likely to succeed. But the fact is, in penalties, only 17% of kicks are directed into the middle of the goal. Why so little? One of the most important reasons is: the fear of shame. The kicker who directs the ball directly at the goalkeeper stands, by people will be considered not to understand. And people who think that a shot into the middle of the goal is more likely to succeed than into the corner of the goal, will be considered unconventional.

In the case above, even Ronaldo doesn’t want to take the risk that people will think he doesn’t understand.

In social life, business, politics, economics, and so on, many thoughts are considered strange. But if observed more deeply, this thought may be something that makes sense. In fact, it is not uncommon to think that it can produce better output or income than most people think.

In recent days, there has been a lot of news in the media about basic food items which are said to be subject to Value Added Tax (VAT). This is because a draft of the KUP Bill has been circulated, one of which is the imposition of VAT on the basic necessities.

The current rule, according to Article 4A paragraph (2)b of the VAT Law, is that basic food items that are very much needed by the people are excluded from the imposition of VAT. Or in other words, these goods are categorized as non-VAT (non-BKP) goods. These goods include rice, grain, corn, sago, soybeans, salt, meat, eggs, milk, fruits and vegetables. Based on the circulating draft of the KUP Bill, the exclusion of basic necessities as taxable goods was removed. That means, later these items will be subject to VAT.

Of course this caused a reaction in the community, most of which the reaction was negative. It is unfair, does not take sides with the small people who are being affected by COVID-19, will cause inflation, and such are some examples of such negative reactions. But if later, it is true that basic food items will be subject to VAT, will the negative things that most people worry about will happen?

Compared to Income Tax (PPh), VAT is indeed more unfair. One reason is because of the characteristics of each tax itself. PPh is a subjective tax, meaning that the tax will be charged depending on who the subject or perpetrator is. If the subject earns taxable income, then PPh will be imposed on the subject. Means that PPh is imposed only on rich people.

While VAT is an objective tax. Taxes will be imposed or not imposed depending on the object or goods/services, regardless of who buys or consumes the goods/services. So, whoever the person is, rich or poor, if you buy taxable goods, you have to pay taxes.

To reduce this injustice, the VAT Law that has been in effect so far excludes basic necessities that are needed by the people from the imposition of VAT. So far, the negative reaction from society in general due to the abolition of these exceptions is understandable.

But perhaps what the public hasn’t thought of so far is that it turns out that the exclusion of basic necessities has created another injustice. The reason is that those who receive “facilities” are not subject to VAT, not only the poor, the rich also enjoy these facilities. Because even rich people need those excluded items.

By removing basic necessities from goods that are exempt from VAT, it means eliminating other negative impacts as mentioned above. Also, so that VAT remains in favor of the poor, several other options can be done.

First, basic necessities sold in traditional markets are not taxable. Meanwhile, basic necessities sold in modern markets (premium groceries) are subject to tax. Actually, with the regulation regarding small entrepreneurs, automatically basic food sold in traditional markets is most likely not subject to VAT.

As we know, so far the provision applies that small entrepreneurs (with current restrictions, entrepreneurs with a profit in one year of not more than 4.8 billion rupiah) are not required to collect VAT , meaning that the goods sold, even though they are actually BKP, are not subject to VAT. It seems that this provision will not change, except perhaps the size of the business circulation limit.

The second option so that VAT remains in favor of the poor is, for certain types of basic necessities that are really needed by the general public (eg rice, eggs, and the like), remain as BKP but get the VAT facility is not collected.

This is different when basic food items are categorized as non-taxable goods (non-BKP). The difference is that when a non-BKP sale occurs, the entrepreneur is not required to report it in a detailed VAT return, only the value of the sale. Meanwhile, the sale of BKP, even though the VAT facility is not collected, must still be reported in detail (including the name and NPWP of the counterparty) in the VAT SPT.

The change in the status of basic food items from not being subject to VAT to being subject to VAT is beneficial for the government. The main thing, of course, is to increase tax revenue from the type of VAT tax. In addition, with the obligation to report BKP sales data in detail in the VAT SPT, this can be used as a monitoring tool through the counter-transaction VAT SPT data. That way, the PPh obligations can also be monitored, so it is possible to be able to increase tax revenue from the type of PPh tax.

In the end, part of the additional tax revenue will be returned to the poor through social assistance programs, especially to the people who are most vulnerable to being affected by COVID-19.

Hopefully from all of that, the government’s policy to make basic food items subject to VAT is a policy like a penalty kicker kicking the ball towards the center of the goal. It is considered strange, but it actually has a greater chance of goodness than the previous policy. I hope.

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