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Ministry suggests reviving COVID-era tax break for car sales
The proposal to reinstate the incentive has resurfaced amid falling car sales. During the first half of 2024, wholesale, or factory-to-dealer sales, were down 19.5 percent year-on-year (yoy) to 408,012 units from the same period last year.
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New cars are parked at a factory in Bojomangu, Bekasi regency, West Java, on March 13, 2024. According to data from the Association of Indonesia Automotive Industries (Gaikindo), wholesale car sales in February reached 70,656 units, up about 1.5 percent from January’s 69,617 units. (Antara/Fakhri Hermansyah)
T
he Industry Ministry has suggested the incoming government led by president-elect Prabowo Subianto should reinstate a policy that would exempt consumers from the luxury tax (PPnBM) on car purchases, which was last put in place during the COVID-19 pandemic to boost sales amid a flagging automobile market.
Through the policy the government previously covered the luxury tax on car purchases on the behalf of buyers.
Industry Ministry spokesperson Febri Hendri Antoni Arief told reporters on Tuesday that the government could collect “two rupiah” in revenue for every rupiah lost in forgone luxury goods tax due to the exemption.
He said the government "must look at industry incentives not as a cost, but as an investment".
Read also: Auto financing falls 15% in July due to slump in new car sales
The proposal to reinstate the incentive has resurfaced amid falling car sales. During the first half of 2024, wholesale, or factory-to-dealer sales, were down 19.5 percent year-on-year (yoy) to 408,012 units from 506,427 units in the same period last year according to data released by Indonesian Automotive Manufacturers Associtation (Gaikindo).
Declining car sales this year have prompted car manufacturers to reassess the industry target of selling 1.1 million cars this year, which marked a 10 percent increase from 1 million cars sold last year.
