TEMPO Interactive, Jakarta: Industry players hope that the government is serious in responding the proposal to abolish the industry fuel oil value-added tax (VAT) of 10 percent per liter.
The proposal for the fuel oil tax abolition was in response to the possibility of fuel oil price hikes in line with the increase of the Mid Oil Platts Singapore (MOPS) rate.
“Fuel oil price hikes would clearly put pressure on the industry's position. Therefore, we need policy alternatives to help smoothen the industry's cash flow,” said Thomas Darmawan, Head of Food and Beverages Businesspeople Association Chairman, yesterday (3/6).
On June 1, 2007 Pertamina increased fuel prices.
Diesel is up five percent from the previous level of Rp5.522 per liter to Rp5.797 per liter.
Pertamina increased the price in accordance to the price standard in Singapore of between 2.9 and 12.0 percent compared to the previous period.
The abolition of industry fuel oil tax, said Thomas, would not lower the state's revenues.
The reason for this is that 10 percent VAT will be imposed on ready-goods products.
“With production being smoother, the amount of production goods and the government's VAT will also increase,” said Thomas.