Govt to raise tax on luxury cars

JAKARTA (JP): The government has issued a decree raising the taxes on luxury cars to 75 percent effective as of September.

The decree stipulates that vehicles with engine capacities of between 2,500 cc and 3,000 cc will be subject to 30 percent tax, as compared to the current rate of 20 percent, Reuters newswire reported.

Vehicles with engine capacities of between 3,000 cc and 4,000 cc, as well as diesel vehicles with engine capacities of between 2,500 cc and 3,500 cc, will be subject to 75 percent tax, up from between 30 percent and 50 percent at present.

Luxury cars are no longer a rare sight on the streets of the capital, especially after the lessening of restrictions on the importation of luxury cars in 1998.

While an average Indonesian earns a little over US$600 a year, the price tag on a luxury car could reach more than $120,000.

Automobile exhibitions, showcasing the latest products of luxury automobile makers such as Ferrari and Masserati, have also been enlivening the domestic market for luxury cars.

During the latest round of the Gaikindo Auto Expo in Jakarta, PT BMW Indonesia, sole domestic distributor for the german car, said it was optimistic it would sell 3,300 cars this year compared to 2,821 cars sold last year.

Jaguar's local distributor, PT Prima Auto Grupindo, targeted sales to reach 204 units this year, from 151 units the previous year.

Such auto shows have become the target of antipoverty protests in the past.

The low import duty and taxes imposed on the vehicles came under fire with critics, such as noted economist Faisal Basri, lambasting the government for allowing the rich to flaunt their wealth at a time when many are struggling to survive.(tnt)