Businessmen ask for more tax incentives

The Jakarta Post, Jakarta

Dozens of representatives of various business associations asked the government on Monday to provide the business sector with fiscal incentives to help alleviate rising costs.

The demand was voiced during a meeting with Director General of Taxation Hadi Purnomo and members of the Indonesian Chamber of Commerce and Industry (Kadin) and the National Economic Recovery Committee (KPEN).

During the meeting, the businesspeople said tax cuts were necessary to offset rising production costs caused by the increase in electricity rates and fuel prices and the "uncertainties" in the country.

KPEN chairman Sofjan Wanandi said tax incentives would allow the business sector to invest in expanding their businesses, which in turn would create more jobs.

"We are using this occasion to unveil all of the obstacles confronting the business sector caused by the unfavorable tax policy," he said.

Earlier this month, the government announced a package of fiscal incentives worth about Rp 6 trillion (US$660 million), including the elimination and reduction of luxury taxes on some 45 items, mainly electronics.

However, the businesspeople who attended the meeting were not satisfied with the stimulus package, saying it did not cover all business sectors.

The representatives of the Association of Soft Drink Manufacturers (ASRIM) complained that they still had to pay luxury taxes on their products. They said there was no reason to impose a luxury tax on soft drinks because they were by no means luxury products.

During the meeting, ASRIM urged the Directorate General of Taxation to exempt soft drinks from luxury taxes.

The Indonesian Association of Feed Manufacturers asked the government to drop plans to impose a luxury tax on feed products, saying the plan would only lead to a surge in the price of chickens and eggs.

The Indonesian Food and Drink Association requested the government scrap added-value taxes on the raw materials for the production of packaged milk.

The association said such a move would reduce the cost of packaged milk by up to 30 percent.

Hadi said he would ask his staff to study all of the requests and would explore the feasibility of acting on them.