Electronic makers seeks tax break

The Jakarta Post , Jakarta | Mon, 02/27/2006 7:08 AM | Business

The Jakarta Post, Jakarta

With demand for electronic products on a downward trend, the Electronics Association (Gabel) is urging the government to abolish luxury sale taxes in the sector.

Gabel chairman Lee Kang Hyun said Friday the sales tax on luxury goods, ranging from 10 to 20 percent, had made domestic products less competitive than smuggled products.

""Electronics goods with prices of up to Rp 20 million (about US$2,100) should be exempted from the luxury tax to increase our sales, which have begun to decline since last year,"" he said after meeting with Industry Minister Fahmi Idris.

He said that last year's sales for electronic products decreased by 20 percent because of people's lower purchasing power.

""Our expenses were increasing while demand for our products was declining and we suffered losses last year,"" Lee said.

Lee said the value of the rupiah against the U.S. dollar had strengthened this year but the currency's appreciation failed to prop up electronic sales.

The rupiah's value against the U.S. dollar appreciated to Rp 9,270 as of Feb. 23 from Rp 10,330 as of August 24, 2005.

Fahmi said he would discuss the tax request with Finance Minister Sri Mulyani Indrawati.

""We need to discuss the matter with the finance minister since any removal of tax will cause losses in government revenues,"" he said.

Ministry official Budi Darmadi said that he would propose a removal of sales tax on limited items based on the specifications and sizes of the products.

""We will suggest an exemption of luxury taxes on certain products, such as 29-inch televisions,"" he said.(02)

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