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No luxury tax, but prices may jump by 40%
The government will revoke the luxury tax on alcoholic beverages from April 1, but don’t be fooled, a new regulation will see prices soar, say industry experts
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he government will revoke the luxury tax on alcoholic beverages from April 1, but don’t be fooled, a new regulation will see prices soar, say industry experts.
The government’s announcement Tuesday to slap a 200 percent increase in excise tariffs, also beginning next month, will instead raise the price of liquor by up to 40 percent from current levels, said an executive of the Association of Indonesian Alcoholic Beverage Producers (GIMMI).
“The high excise tariffs will result in an increase in prices by at least 40 percent, despite the removal of the luxury tax,” said Ipung Nimpuno, the spokesman for the GIMMI.
In a regulation posted Monday on the website of the Directorate General of Customs and Excise, excise tariffs for domestic and imported liquor will be raised by 200 percent on average.
Based on the new excise tariff on alcoholic beverages, excise tariffs for local liquor will be raised by about 200 percent on average.
Local liquor with an alcohol content of less than 5 percent, such as beer, will see excise tariffs raised by more than 200 percent, to Rp 11,000 from the previous Rp 3,500.
Imported liquor with an alcohol rate of more than 20 percent will see excise tariffs raised by
160 percent, to Rp 130,000 per liter bottle.
The Finance Ministry also reduced the drink categories to three, from the previous five.
The new regulation is in-line with the 2009 law on value added and luxury taxes, which eliminated the luxury tax imposed on liquor.
“The aim is to improve the structure of excise tariffs as a whole,” director of excise, Frans Rupang said Tuesday.
In order to reduce the rampant illegal trading of liquor in the country, the government has recently decided to remove the exclusive rights awarded to PT Sarinah to import alcohol, in addition to its decision to remove the luxury tax on liquor products.
Ipung, the spokesman for the GIMMI, which represents four alcoholic-beverage companies such
as Angker and Bintang beers, said the extra-high excise tariffs to be imposed next month would instead encourage illegal trading on the black market.
“The new excise policy will cost us a lot,” he said, adding that with the new fiscal policy, the
association’s members would spend at least Rp 4.8 trillion this year on custom and excise payments alone.
“The number is much higher than the Rp 4 trillion they paid for customs, excise and luxury taxes last year,” he added.
The association’s members will need to adjust their investment plans with the expected increase in their tax payments, he said
Due to the tariff changes, the government expects excise reve-nues will increase to Rp 58.3 trillion from Rp 56.7 trillion collected last year.
