Jakarta. The upcoming hike on value-added tax (VAT) has sparked worries among Indonesian hotels and restaurants with the industry association saying that it could deal a blow to the overall sales.

The government is planning to raise VAT from 11 percent to 12 percent starting in January. Calls are mounting for the government to delay the policy -- this time, the plea is coming from the Indonesian Hotel and Restaurant Association (PHRI).

“All sectors have warned [the government] that the [VAT hike] could lower sales,” PHRI chairman Hariyadi Sukamdani told reporters in Jakarta on Tuesday.

According to Hariyadi, the higher VAT would mean lower purchasing power, particularly among the middle to lower class. The higher tax would also add more burden on the people. The effects are also not limited to the hotel and restaurant sector alone, but also businesses with a lower middle market. 

PHRI has also penned a letter to President Prabowo Subianto and Finance Minister Sri Mulyani to reconsider the policy.

“In that letter, we asked them to reassess the policy,” Hariyadi said.

He added: “Hopefully, the government can review the policy based on data and research.”

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