Vehicle Tax Stimulus: A Solution to Revive the Economy and Car Sales

JAKARTA, KOMPAS.com – Senior researcher at the Centre for Sustainable Transportation Systems at the Bandung Institute of Technology (ITB), Agus Purwadi, has proposed that the government evaluate motor vehicle tax policies amid the trend of a declining national automotive market. According to him, this step is crucial to boost car sales again while maintaining the momentum of economic growth. Considering that the current automotive tax structure in Indonesia is still relatively high. On the other hand, the market has yet to show signs of recovery. Based on Gaikindo data, domestic car sales (wholesales), which were around 1.2 million units in 2013–2014, have continued to weaken to 800,000 units by 2025. The combination of high vehicle prices and pressured purchasing power is seen as one of the main causes of the sluggish demand. In his explanation, Agus highlighted the policy approach that is still oriented towards revenue collection (taxation mindset). This scheme makes vehicle prices even more expensive, ultimately suppressing sales volumes and potentially eroding state revenues themselves. “If taxes are too high, the impact on the economy becomes expensive. This must be avoided,” said Agus in Jakarta on Tuesday (14/4/2026). He emphasised that tax policies should not burden sectors that play a role as economic drivers. The government should instead encourage economic activity first so that state revenues grow naturally. As a concrete step, Agus suggested that the evaluation of national automotive policies be conducted through a benchmarking approach with other countries with similar characteristics, such as Thailand, Malaysia, and Vietnam. “Don’t always look at developed countries because our conditions are different, especially in terms of GDP. Don’t be proud to look at neighbouring developing countries or India,” said Agus.