New luxury tax policy unrealistic: Electronics makers
New luxury tax policy unrealistic: Electronics makers
JAKARTA (JP): Electronics producers on Friday urged the
government to review the new luxury tax ruling, describing the
move as unrealistic.
The new tax policy will not only hurt manufacturers but also
consumers, especially those of the lower income group, as many of
the products slapped with the luxury tax are no longer considered
luxury items, they said.
Marketing manager of PT LG Electronics Indonesia Sung Khiun
said products such as television sets with screen sizes of
between 14 inches and 20 inches should be excluded from the list
as to not disadvantage the lower income group.
"Where will they find entertainment and information if
televisions become more expensive because of the higher tax?" he
told The Jakarta Post.
Sung said flatirons should also be exempt from the tax as they
were now considered a necessity rather than a luxury.
The government has imposed a luxury tax between 10 percent and
75 percent on 41 groups of items considered as luxury goods. But
many of the products which are subject to the new tax are no
longer regarded as luxury goods.
The tax, which is effective this month, among other things,
renders a 10 percent luxury tax on televisions with screens below
21 inches and refrigerators with capacity below 230 liters.
A 20 percent tax is imposed on refrigerators (with capacity of
more than 230 liters), heaters, air conditioners, washing
machines, flatirons and televisions with screens between 21
inches and 29 inches.
Televisions with screens between 29 inches and 34 inches are
given a 30 percent tax, those with screens measuring between 34
inches and 43 inches, a 40 percent tax, and televisions with
screens measuring more than 43 inches, a 50 percent tax.
Separately, chairman of the Indonesian Retail Merchants
Association (Aprindo) Kustarjono Prodjolalito said the new tax
policy would affect electronics producers who sell to retailers.
He said in anticipation of a lower customer demand, stores
will reduce their order for electronic goods from producers.
"We won't exactly be hurt by the new tax policy, but our
electronics sales will drop," Kustarjono said.
The new tax policy will encourage smuggling because the price
difference between legally imported goods and smuggled goods will
be even more pronounced, Sung said.
"To import a 14 inch television for example, an importer needs
to pay at least 40 percent in taxes," he said, explaining that 20
percent was for import duty, 10 percent for luxury tax and
another 10 percent for value-added tax.
"This will cause prices to rise, so the lower income group
won't be able to afford them," he said, adding that they would
turn to smuggled goods instead.
Sung said the luxury tax would also stall the growth of the
Indonesian electronics market.
"As prices of electronic goods rise, the demand for those
products will decrease," he said.
The electronics sales growth will not be as high as it was
projected, Sung said. The sales growth this year was projected to
be about 40 percent, compared to the 30 percent growth last year.
(tnt)
JAKARTA (JP): Electronics producers on Friday urged the
government to review the new luxury tax ruling, describing the
move as unrealistic.
The new tax policy will not only hurt manufacturers but also
consumers, especially those of the lower income group, as many of
the products slapped with the luxury tax are no longer considered
luxury items, they said.
Marketing manager of PT LG Electronics Indonesia Sung Khiun
said products such as television sets with screen sizes of
between 14 inches and 20 inches should be excluded from the list
as to not disadvantage the lower income group.
"Where will they find entertainment and information if
televisions become more expensive because of the higher tax?" he
told The Jakarta Post.
Sung said flatirons should also be exempt from the tax as they
were now considered a necessity rather than a luxury.
The government has imposed a luxury tax between 10 percent and
75 percent on 41 groups of items considered as luxury goods. But
many of the products which are subject to the new tax are no
longer regarded as luxury goods.
The tax, which is effective this month, among other things,
renders a 10 percent luxury tax on televisions with screens below
21 inches and refrigerators with capacity below 230 liters.
A 20 percent tax is imposed on refrigerators (with capacity of
more than 230 liters), heaters, air conditioners, washing
machines, flatirons and televisions with screens between 21
inches and 29 inches.
Televisions with screens between 29 inches and 34 inches are
given a 30 percent tax, those with screens measuring between 34
inches and 43 inches, a 40 percent tax, and televisions with
screens measuring more than 43 inches, a 50 percent tax.
Separately, chairman of the Indonesian Retail Merchants
Association (Aprindo) Kustarjono Prodjolalito said the new tax
policy would affect electronics producers who sell to retailers.
He said in anticipation of a lower customer demand, stores
will reduce their order for electronic goods from producers.
"We won't exactly be hurt by the new tax policy, but our
electronics sales will drop," Kustarjono said.
The new tax policy will encourage smuggling because the price
difference between legally imported goods and smuggled goods will
be even more pronounced, Sung said.
"To import a 14 inch television for example, an importer needs
to pay at least 40 percent in taxes," he said, explaining that 20
percent was for import duty, 10 percent for luxury tax and
another 10 percent for value-added tax.
"This will cause prices to rise, so the lower income group
won't be able to afford them," he said, adding that they would
turn to smuggled goods instead.
Sung said the luxury tax would also stall the growth of the
Indonesian electronics market.
"As prices of electronic goods rise, the demand for those
products will decrease," he said.
The electronics sales growth will not be as high as it was
projected, Sung said. The sales growth this year was projected to
be about 40 percent, compared to the 30 percent growth last year.
(tnt)