Carmakers welcome new tax plan

Carmakers welcome new tax plan

Novan Iman Santosa, The Jakarta Post, Jakarta

Indonesian automakers mostly gave a positive response on Thursday
to the government's plan to review the current method of
determining the luxury tax on cars, saying it would be fairer and
beneficial to customers, but reminded the government to be very
careful in implementing the tax change.

Minister of Industry and Trade Rini Soewandi said on Wednesday
that the tax formula would be changed from one based on engine
displacement to one based on a car's value, to increase fairness.

"The current luxury tax is based on engine displacement and
quite unfair to customers. We expect to apply the new tax system
next year," she said.

"Customers often have to pay a higher price just because the
car they are buying has a higher engine displacement, although
price wise, it's cheaper," she added.

Rini gave the example of a multipurpose vehicle (MPV), which
usually come with a higher engine displacement but have a lower
price than other cars with a lower engine displacement.

It is still unclear, however, how to define a car's value.

"How do we calculate a car's value? Its wholesale price or its
retail price?" asked senior managing director of Toyota Motor
Company, Akio Toyoda.

"If the tax is based on a car's retail price, it will be
affected by price fluctuations, further impacting on the tax
system," he added.

Chief executive officer of PT Auto Euro Indonesia, which
handles French car Renault, Christian Iskandar, agreed that the
government should be careful.

"However, such a change is a good thing, and would advantage
customers," he said.

"We must also remember that the government is trying to
increase its tax revenue."

Marketing director of Korean car manufacturer PT KIA Motors
Indonesia Suwanda Setiadi said price fluctuation was not such a
big problem, as it had been calculated beforehand and would be
generally stable.

"I don't think there will be any volatile price fluctuation,
except for force majeure, such as we suffered during the crisis
in late 1990s," he said.

"It would be better if we calculated the car's price based on
its off-road condition, or just after being finished at the
factory," he added.

Marketing director of TMC's subsidiary in Indonesia, PT
Toyota-Astra Motor, Keiichi Murakami asserted that the company
would work together with the government if the latter decided to
formulate the luxury tax based on a car's value.

"We will also hold intensive discussions with the Association
of Indonesian Automotive Manufacturers (Gaikindo)," he said.