Car import tariff, tax revised<\/p>\n
JAKARTA (JP): The government on Thursday restructured taxes
\nand import tariffs on automobiles, claiming the changes could
\nlower the showroom prices of small sedans by 9.8 percent and
\nsmall pickups by 7.5 percent.<\/p>\n
However, prices of minivans, which account for more than 80
\npercent of total car sales, are estimated to decline by a mere
\n1.2 percent, while those of luxury cars with engine capacities of
\nmore than 1,500 cubic centimeters will increase.<\/p>\n
However, Minister of Industry and Trade Rahardi Ramelan, who
\nannounced the new policy, said the impact of the new tax and
\nimport tariff structures would depend on market competition, the
\nsupply-demand equation and pricing policies of assemblers.<\/p>\n
"The new policy abolishes tax and tariff incentives linked
\nwith the level of local content to comply with the rules of the
\nWorld Trade Organization," Rahardi said.<\/p>\n
Rahardi said import tariffs on completely-built-up (CBU)
\nsedans were cut to between 65 percent and 80 percent depending on
\nthe size of the engine, from 200 percent previously.<\/p>\n
Import tariffs on CBU jeeps and minibuses were lowered to 45
\npercent from 105 percent, while those for commercial vehicles
\nranged from five percent to 40 percent depending on their gross
\nweight.<\/p>\n
The changes are effective immediately.<\/p>\n
"This new automotive policy is designed to make cars more
\naffordable to consumers, to safeguard investments already made in
\nthe domestic car industry and to build a competitive automobile
\nindustry," the minister said.<\/p>\n
The new policy set import tariffs at a maximum of 15 percent
\nfor all car components, and between 35 percent and 50 percent for
\nsedans imported in complete-knocked-down form for local assembly.<\/p>\n
The import tariff for trucks was set at 7.5 percent and for
\nincomplete vehicles at 15 percent.<\/p>\n
Rahardi said that to offset the potential decrease in
\ngovernment revenues from the lower tariffs, the government raised
\nluxury sales taxes on most cars.<\/p>\n
Luxury taxes on sedans were raised to between 30 percent and
\n50 percent, from 20 percent and 35 percent previously, while
\nthose on minivans vans were narrowed to 10 percent and 30 percent
\nfrom zero to 35 percent<\/p>\n
Buses, which were previously exempt from luxury taxes, are now
\nsubject to a 10 percent tax, but trucks, and motorcycles with
\nengines smaller that 250 cubic centimeters, remain exempt from
\nluxury taxes.<\/p>\n
The Ministry of Finance's Director General of Taxation,
\nAnshari Ritonga, who also attended the news conference, said the
\ncut in import duties would lower government revenue by an
\nestimated Rp 64 billion in the current fiscal year.<\/p>\n
Rahardi added that the new policy was taken ahead of the Jan.
\n1, 2000, deadline, imposed on Indonesia last year by the WTO, for
\nabolishing tax and tariff incentives linked to the use of local
\ncomponents.<\/p>\n
The government implemented last July, ahead of schedule, the
\nruling of the WTO Dispute Settlement Body requiring Indonesia to
\nabolish special taxes, tariffs and credit privileges to the Timor
\nnational car program owned by former president Soeharto's son
\nHutomo Mandala Putra.<\/p>\n
"This new policy will initially affect some inefficient
\nautomobile and component manufactures, but in the medium to long-
\nterm, it will definitely be beneficial to the industry and help
\nlocal car companies become more competitive," he said.<\/p>\n
Rahardi denied that the delays in the launching of the new
\npolicy were due to lobbying by several big auto makers that had
\ninvested heavily in the manufacture of car components.<\/p>\n
But he conceded that the fate of big investments in the
\nindustry had been thoroughly considered in the formulation of the
\nnew tax and tariff policy.<\/p>\n
Meanwhile, the chairman of the Association of Indonesian
\nAutomotive Industries (Gaikindo), Bambang Trisulo, welcome the
\nnew measure, hailing it as "a bitter pill which will save the
\nlife of a dying patient".<\/p>\n
"Let's face it, we have no choice. Sooner or later we will
\nhave to enter the free trade era. Although it may hurt the
\nautomotive industry, we need it to provide a strong base for our
\nautomotive industry to grow," Bambang said. (gis)<\/p>",
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"sponsor": "Okusi Associates",
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