Govt may delay tax hike plan

Govt may delay tax hike plan

Antara, Jakarta

In a proposal sent to President Susilo Bambang Yudhoyono and
Minister of Finance Sri Mulyani Indrawati, Minister of Industry
Fahmi Idris has urged the planned increase in the automobile
luxury tax be delayed.

"We have sent a proposal to the President and the minister of
finance," Fahmi said on Tuesday.

He made the proposal amid fears the higher luxury tax outlined
in an Oct. 25 presidential decree would hurt the automotive
industry.

The decree raises the tax on sedans with an engine size of
between 1.5 liters and 3.0 liters to 50 percent of the benchmark
price, from 40 percent. The tax on vans with an engine size of
between 1.5 liters and 2.5 liters will go up to 25 percent from
20 percent.

"The proposal on the new tax rates and the time line of the
implementation will be discussed further. The discussion could
last five years but it might also finish in a month," Fahmi said.

He also said he would encourage global automotive
manufacturers to increase their investment in the country and
make Indonesia their regional production base.

"It is not fair if they (the manufacturers) move their
production bases to Thailand and market their products in
Indonesia," he said.

The automotive industry has suffered under rising interest
rates, following the central bank's decision to raise its key
rate to 12.75 percent on Dec. 6. The Association of Indonesian
Automotive Manufacturers has revised down this year's sales
target from 550,000 units to 530,000 units.