Excise duty to be imposed on several products
The Jakarta Post, Jakarta
In a bid to boost excise revenue, the Directorate General of Excise and Customs will impose excise duty on a number of new products starting Jan. 1 next year, provided that the House of Representatives give its approval.
The excise duty -- to be slapped on cassettes, laser discs, compact discs, video compact discs and digital versatile discs (DVDs) -- will have the potential to jack up state revenue by up to Rp 170 billion (US$18.08 million), said Minister of Finance Boediono, who oversees the excise and customs office, on Friday.
Boediono added the ministry had met with relevant parties, including business players, and discussed the issue. "We have approached them, and it seems that they do not object to the plan," he said, without elaborating.
At present, excise duty is imposed on cigarettes, alcohol and liquor, with this year's combined revenue targets at Rp 27.7 trillion, or 1.4 percent of gross domestic product (GDP) -- around 90 percent of which come from cigarettes.
But for next year, the House Budget Commission has raised the excise revenue target to Rp 28.62 trillion.
Apart from increasing revenue, Director General of Excise and Customs Eddy Abdurrachman said that the plan was also aimed at setting up a clear mechanism to control smuggling and piracy in the products.
"Based on a survey carried out by the ministry, pirated products make up about 90 percent of the total output in these products.
"By slapping duty on them, it will create a simpler supervisory mechanism, because it's hard to differentiate between original products and pirated ones just by looking at them," Eddy said.
The government has been trying hard to seek other financial sources to finance the annual state budget, severely crippled through servicing domestic and foreign debt payments -- both maturing principal and interest.
It remains to be seen, however, whether the move will be able to reduce rampant piracy and smuggling, and what impact it will have on the industry.
Slapping on the duty will increase production costs and push up the price of the products.
Not only will this discourage customers and hurt producers in the end, but will also create a huge price disparity between original and pirated/smuggled products -- which could then be counterproductive to the government's bid to curb the illegal activities in the first place.
Elsewhere, if put into action, Eddy said the state coffers could be richer by Rp 98.4 billion to Rp 170 billion on the assumption that each product carried an excise duty of Rp 750.
As for this year, the office has collected Rp 12.77 trillion, which accounts for 47 percent of the full-year target.
The figure was higher than that collected in the same period last year, which stood at Rp 10.87 trillion.
"The second semester will be better, because the revenue is greater from mid-year to the year-end," Eddy said.