Tax cut on luxury cars for G-15 Summit protested

JAKARTA (JP): Dozens of people grouped under the Anti Luxury Car Movement staged a demonstration on Friday in front of the State Palace to protest the huge tax cut for 284 luxury cars that will be used for the coming G-15 summit in the city.

They criticized the government for imposing only 5 percent tax on the fleet of imported cars, which is much lower than normal tax levels of between 45 percent and 80 percent.

The decision on the tax cut was stipulated in a Feb. 9 letter issued by the President and noted in a letter of the Minister of Finance on Feb. 13.

The G-15 conference will take place in May.

"The government should be more sensitive towards the public, who are suffering economic hardship during this crisis, yet the government puts its weight instead behind luxury items," said MS Jihad, head of the movement.

"We suggest that the government borrow (luxury) cars from conglomerates, or just use ordinary cars for the G-15 summit," he was quoted by Antara as saying.

The government has assigned two companies to import a total of 400 vehicles, including 284 luxury cars for the meeting.

Jihad said that the state is suffering Rp 137.5 billion (about US$13.7 million) losses due to the tax cuts. The policy is a violation against Law No.10/1995 on Customs and Excise, which stipulates that luxury cars are excluded from items that can have tax reductions, he said.

Among the imported cars are 44 Mercedes Benz S600L's worth Rp 2.5 billion ($250,000) each. Under normal circumstances the government would have imposed import duty of 80 percent and taxed the luxury item 75 percent. So the total amount that should have been received by the government for the 44 cars would have been Rp 57.3 billion. Because of the tax cut, the importers are only paying Rp 5.6 billion.

The demonstrators carried banners criticizing the government's policy on the tax cut and distributed leaflets to passers by.

Last year they staged a series of demonstrations in several places, such as at the Ministry of Industry and Trade, Customs and Excise Office, and at an Automotive Expo, to protest the government's decision to allow the import of pre-assembled cars. They condemned the government for being insensitive towards the poor and lacking awareness of the nation's critical domestic situation. During a demonstration, some members of the group were assaulted by unidentified people.

On Wednesday the Italian luxury sportscar maker Ferrari opened a dealership in the Indonesia.

Each of the 10 Ferraris the shop has been allocated this year will fetch about Rp 3 billion apiece. The showroom will also stock 10 Maseratis which will sell for a slightly cheaper Rp 1 billion price tag.

The importer, PT Citra Langgeng Otomotif, told Reuters they were targeting one percent of the 200 million population and another one percent of that one percent.

Despite the prolonged crisis which has made millions of people suffer, the sale of luxury cars has remained buoyant, as a small group of people remain relatively unaffected by the country's economic instability. (sim)