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.