Jakarta residents may have to reach deeper into their pockets to buy a car as the price is likely to increase by 20 percent following the city administration’s plan to raise the yearly ownership (PKB) tax and vehicle registration fee (BBN), starting in June.
Indonesian Automotive Industry Association (Gaikindo) chairman Sudirman Maman Rusdi said Tuesday that the association had expressed its objection toward the tax hike plan during a meeting with the city administration last week, because it might lead to a significant increase in car prices.
“The economic situation is just recovering. The [vehicle] industry is facing a possible decline [following the tax hike plan],” added Sudirman as quoted by kompas.com.
The Jakarta Provincial Legislative Council has proposed a hike of six taxes next month, following the implementation of a 2009 law on regional tax and retribution.
The new law stipulates that an increase in yearly ownership tax should be implemented progressively, for example, by 2 percent for the first ownership and by 10 percent for the second.
The council has also proposed to increase the vehicle registration fee by 20 percent.
“Therefore, car prices could rise by 15-20 percent. Our previous prediction was that we could sell to 600,000 units this year. However, the tax hike would hamper sales,” Sudirman said.
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