Auto makers warn government that tax increase will backfire<\/p>\n
JAKARTA (JP): A number of auto manufacturers warned the
\ngovernment on Wednesday that imposing higher luxury sales taxes
\nwould hurt automobile sales this year, which could in turn
\nbackfire on the plan to raise tax receipts.<\/p>\n
They said the tighter tax policy would be counterproductive
\ngiven this year's sluggish auto market.<\/p>\n
\"I believe the recipe being used is not going to produce the
\nresults that are expected,\" said president of PT General Motors
\nIndonesia Luis F.F. Madaleno at a meeting between auto producers
\nand Minister of Industry and Trade Luhut Binsar Pandjaitan.<\/p>\n
The government has decided to hike luxury sales tax on
\nautomobiles in an attempt to cover the widening 2001 state budget
\ndeficit.<\/p>\n
Although the new tax rates have not yet been determined,
\nMinister Luhut said the government might aim for Rp 330 billion
\n(about US$28.94 million) in additional tax revenues from the auto
\nindustry.<\/p>\n
\"This could be negative not only for the automobile industry
\nbut also for the objectives of the government,\" Madaleno warned.<\/p>\n
Auto producers mainly blame political instability and a weaker
\nrupiah, which pushes automobile prices up, for this year's grim
\nmarket outlook.<\/p>\n
Initially expecting auto sales this year to equal last year's
\n300,000 units, many have now lowered their predictions to between
\n240,000 and 280,000 units.<\/p>\n
\"There is a tremendous risk that this (higher taxes) will
\naffect the numbers (of automobiles sold) and, at the end of the
\nday, the revenue. Because the point is not the percentage, but
\nrather the revenue coming to the government,\" Madaleno explained.<\/p>\n
Madaleno called for more discussion on the tax policy so that
\nthe auto industry and the government could seek a win-win
\nsolution.<\/p>\n
He suggested that the government allow the producers to
\npresent their own proposals for raising government revenues from
\nthe auto sector.<\/p>\n
The president of PT Astra Daihatsu Motor, Tetsuya Honda, also
\nwarned that if the government raised tax rates by 15 percent, the
\nautomobile industry's sales volumes could decline by 26 percent.<\/p>\n
\"This (decline) will affect all types of automobiles,\" he
\nadded.<\/p>\n
Meanwhile, the marketing director at PT Astra Toyota Motor,
\nAlam Wijono, said that the company's announcement of higher
\nautomobile prices next month had already lowered demand
\nsignificantly.<\/p>\n
\"If we adjust our dollar rates to 11,000, then we will have to
\nraise our prices by between 10 percent and 15 percent,\" Alam
\nexplained.<\/p>\n
He said that as companies adjusted their prices to take
\naccount of the higher dollar, the government was already
\nguaranteed higher tax revenues in line with the increase in
\nautomobile prices.<\/p>\n
According to Suseno, an executive of the Association of
\nIndonesian Automotive Industries (Gaikindo), consumers pay too
\nmuch in taxes when purchasing an automobile.<\/p>\n
\"For a passenger vehicle that costs Rp 100 million, the
\nconsumer pays Rp 60 million in taxes,\" he said.<\/p>\n
He added that of the various government revenue-collecting
\nmechanisms in the automotive industry, luxury sales tax was the
\nmost onerous as companies had to pay the tax up-front each year.<\/p>\n
Gaikindo chairman Bambang Trisulo later told reporters that
\nGaikindo's appeal to have the tax hike postponed had been
\nrejected.<\/p>\n
Bambang said that Minister Luhut had expressed his
\nunderstanding for the auto industry's woes, but had little choice
\nother than to go ahead with the planned tax hike.<\/p>\n
He added that the projected Rp 330 billion increase in tax
\nrevenue from the auto industry had yet to be approved by the
\nMinistry of Finance.(bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/auto-makers-warn-government-that-tax-increase-will-backfire-1447893297",
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