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Govt mulls reviving COVID-era tax incentives to boost car sales
The government is considering a suspension of the luxury goods tax on car purchases to aid the flagging automotive market.
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Cars pass along Jl. Gatot Subroto in Jakarta on June 19, 2024. (Antara/Muhammad Adimaja)
T
he government is mulling over a plan to reinstate tax incentives put in place during the COVID-19 pandemic to aid the flagging car market.
Susiwijono Moegiarso, secretary of the Office of the Coordinating Economic Minister, said on Thursday that the government was seeking input from the Indonesian Automotive Manufacturers Association (Gaikindo) regarding a possible reintroduction of the incentive, which would see the government cover the luxury tax (PPnBM) for car purchases on buyers’ behalf.
He said the tax incentive had proven effective in the past at shoring up market demand but that car sales had begun to decline once the incentive expired.
“The PPnBM scheme was very effective in maintaining market demand. They [Gaikindo] stated that in the first semester of this year, their evaluation showed a significant decline in the automotive sector,” he said on Thursday, as reported by Bisnis.
Read also: Carmakers to revise targets as first half sales disappoint
During the first half of 2024, wholesales, or factory-to-dealer sales, were down 19.5 percent year-on-year (yoy) at 408,012 units from 506,427 units in the same period last year according to Gaikindo data.
The decline in car sales has prompted the association to reassess its ambitious target of selling 1.1 million cars this year, which marked a 10 percent increase from 1 million cars sold last year.
