Excise duty to be imposed on several products
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.