Gus Dur's extravagance

Gus Dur's extravagance

Rules are meant to be broken. This time, it is the government
which has broken one of its own rules. It is odd that the
government's decision to give generous tax breaks to two
companies importing more than 400 cars, including some 280 luxury
cars, benefits only the importers and the eventual owners of the
vehicles.

The government, and thus the people, will be worse off by
about Rp 140 billion (about US$13 million) according to one
estimate. That is the amount the government is foregoing by
giving huge tax cuts for the imported luxury cars which would be
used to impress foreign guests when President Abdurrahman Wahid
hosts the Group of 15 summit of developing countries in May.

The amount in itself may be small. But considering that the
government is cash strapped -- it is having to borrow more and
more from the International Monetary Fund, other foreign donors
and creditors, and from members of the public through the
issuance of bonds to plug a huge budget deficit -- that $13
million is simply extravagant.

And considering that the government has had to shelve many
development projects that would benefit the people this year --
health and education among them -- because of budgetary
constraints, the decision to give away $13 million to car
importers (or the eventual buyers of the cars), shows the
government has really lost its sense of crisis. The
administration -- still widely billed as Indonesia's first ever
democratically elected -- is downright insensitive to the
suffering of the people.

President Abdurrahman has personally seen to it that the two
companies appointed to import the cars for the G-15 summit need
only pay 5 percent import tax. Ordinarily, such vehicles are
subject to between 45 percent and 80 percent in import tariffs
and taxes. A 1995 customs law, which lists goods that can be
given tax breaks under certain circumstances, does not include
luxury cars.

There is no doubt the President wants to give red-carpet
treatment to the heads of government when he hosts the G-15
summit in Jakarta in May. It is doubtful, however, that his
guests would be impressed if they knew the real story behind the
limousines they rode in.

The decision to grant the tax breaks was totally uncalled for.
The government could have imposed the tariffs and taxes, or even
paid them up front if the appointed importers could not pay them,
used the vehicles during the summit, and then reclaimed the
tariffs and taxes from the wealthy Indonesians who would buy the
cars later on.

Selling these vehicles after only a short use at the G-15
summit should not be any trouble at all. Any car dealer in
Jakarta will tell you that these luxury cars will sell like hot
cakes in no time, even without the tax breaks. Why should the car
importers or the eventual owners of these cars benefit at the
expense of the government and the people?

If anything, looking at the increasing number of luxury cars
plying the streets of Jakarta, the import tariffs and taxes on
luxury goods are still way too low. The government could impose
higher tax rates without significantly denting overall sales.

It is simply beyond anyone's comprehension why President
Abdurrahman would antagonize the public at a time when his
credibility and popularity was at their lowest.

Former president Soeharto also provoked a public outcry when
he imported luxury cars for the Non-Aligned Movement (NAM) summit
in 1992 and for the Asia Pacific Economic Cooperation (APEC)
forum in 1994. But the economy was booming and Soeharto, being
the tyrant that he was, could afford to ignore public criticism.

Gus Dur, as host of the G-15 summit, is doing exactly what
Soeharto did. But today, the economy is still very much in the
doldrums and poverty is still on the rise. Gus Dur is no
Soeharto. He cannot lightly dismiss criticism, especially now of
all times, without further eroding public support.