Govt to revise duty on commodities
Govt to revise duty on commodities
Rendi A. Witular, The Jakarta Post, Jakarta
The government will revise the policy on export duty for crude
palm oil (CPO) and coal, as well as on luxury tax for
automobiles, following concerns that the performance of the
industries could otherwise be severely affected.
The decision was made on Thursday in a limited meeting
presided over by President Susilo Bambang Yudhoyono and attended
by Coordinating Minister for the Economy Boediono, Minister of
Finance Sri Mulyani Indrawati and Minister of Industry Fahmi
Idris.
"We have decided to revise the policy since there is an
indication that it would severely disrupt the performance of
several industries at a time when the economic condition is not
that favorable," said Boediono.
New decrees on the revisions are expected to be issued before
the new year, according to Mulyani.
She said the government would cut export duty on CPO to 1.5
percent from the initial plan of 3 percent, hopefully starting
from Dec. 26, to help local producers compete in the
international market.
The benchmark export value to be taxed will be based on the
CPO free-on-board (FOB) international price, which currently
stands at around US$420 per ton. The price will be reviewed
regularly to reflect market prices.
The government planned to impose 3 percent export duty on CPO
in September. However, the policy has not been implemented
because the government is still preparing to revise the minimum
export price for the product.
During the meeting, the government also agreed to proceed with
its plan to impose 5 percent export duty on coal but with a more
flexible tax refund facility for coal producers in order to help
reduce their burden.
"There is no changes in the rate. But the government will try
to speed up the tax refund process in order to reduce the
operational burden of coal producers," said Mulyani.
The finance ministry issued a decree on Oct. 11, stipulating
that all coal exports be liable to 5 percent duty based on FOB
prices.
The Indonesian Coal Mining Association had criticized the
export duty policy, arguing that it could deter investment rather
than meet its purpose of generating more revenue and securing a
local supply of coal.
The controversial luxury tax policy on automobiles was also
discussed during the meeting, with the government eventually
agreeing to cancel the policy due to concerns that the industry
would collapse because of the recent economic slump.
"Automobile sales have already decreased over the past couple
of months due to people's lower purchasing power. The performance
of the industry will further decline should we insist on imposing
the tax," said Mulyani.
Based on a presidential decree issued on Oct. 25, buyers of
sedans with an engine size of between 1.5 liters and 3.0 liters
will have to pay 50 percent tax on the benchmark price, from the
previous 40 percent.
Those purchasing vans with an engine size of 1.5 liters to 2.5
liters will have to pay 25 percent tax, from 20 percent,
according to the presidential decree.
Industry players have slammed the decree, which they warn will
deliver a devastating blow to already falling auto sales hit hard
by high inflation and interest rates.
Fahmi said a revision would help drive automobile sales to
reach more than 500,000 units next year, which was expected to
generate as much as Rp 8.6 trillion ($877.5 million) in state tax
proceeds.