Govt to raise tax on luxury cars

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)