Soft drink makers want tax axed

Soft drink makers want tax axed

JAKARTA (JP): Soft drink manufacturers called on the
government to revoke the 10 percent luxury tax imposed on their
products arguing that they could in no way be categorized as
luxury goods.

Chairman of the Association of Soft Drink Industries (ASRIM)
Mugijanto said in a press statement on Tuesday that soft drinks,
including packaged mineral water and carbonated beverages, were
consumed by all classes in society.

The government imposed the luxury tax on soft drinks in
January this year in a bid to help increase tax receipts. The
government has argued that soft drinks cannot be considered as
basic commodities and are consumed by higher-income groups.

But Mugijanto insisted that none of the characteristics of
luxury goods were present in soft drinks, citing the results of a
recent survey conducted by a research unit of the University of
Indonesia.

According to the survey, which covered soft drink consumers in
eight major cities across the country, soft drink consumers had
an average monthly income of less than Rp 1 million (US$108), and
consumed soft drinks on a once per month to once per week basis.

"Soft drinks are consumed as frequently as snacks and ice
cream, both of which are exempted from the luxury tax," the
survey said.

The luxury tax would only burden consumers on lower incomes,
it added.

Mugijanto said his association had conveyed the survey
findings to the Minister of Industry and Trade Rini M.S.
Soewandi.

"We hope the government will quickly cancel the luxury tax
imposed on our products," he said.

He said the imposition of the tax had resulted in lower sales
due to falling demand.

The decline in demand had forced soft drink manufacturers to
reduce their investment which in turn meant slashing their work
forces, he said. (dmr)