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Jakarta Post

No tax break for new cars, Sri Mulyani says

  • Adrian Wail Akhlas

    The Jakarta Post

Jakarta   /   Mon, October 19, 2020   /   05:13 pm
No tax break for new cars, Sri Mulyani says Finance Minister Sri Mulyani Indrawati (right) attends a working meeting with House of Representatives Commission XI in Jakarta on Feb. 19. (Antara/Aditya Pradana Putra)

The government will not slash the vehicle tax (PKB) on new cars for individuals and businesses to zero percent this year, Finance Minister Sri Mulyani Indrawati said on Monday, despite calls from the Industry Ministry and the automotive industry to do so.

Sri Mulyani said the Finance Ministry was not considering the tax cut proposal because it was seeking to provide incentives that would benefit the entire economy, not just industry one in particular.

“We will continue to provide support for all economic sectors through the incentives we have previously announced,” she said.

“Every incentive proposed [to the government] will be thoroughly evaluated [to ensure] that it will not have a negative impact on other economic activities,” she went on to say, adding that the government would seek other ways to support the automotive industry.

Previously, Industry Minister Agus Gumiwang Kartasasmita urged the finance minister to suspend the new car tax until December to boost faltering sales.

Government Regulation No. 73/2019 states that new passenger car purchases are subject to a luxury tax (PPnBM) of between 15 and 70 percent, depending on the vehicle’s maximum passenger capacity and number of engine cylinders.

Wholesale car purchases in Indonesia grew by 30.4 percent month-to-month (mtm) to 48,558 units in September, according to Association of Indonesian Car Producers’ (Gaikindo) data compiled by diversified conglomerate PT Astra International.

Despite recording strong month-to-month growth, the September figure was almost 48 percent lower than that of September of last year.

Some 372,000 cars were sold wholesale from January to September of this year, leaving the industry a 228,000-car gap to make up in the final quarter of the year to reach its target.

Gaikindo has slashed its domestic car sales target by 40 percent to just 600,000 units this year and has said further cuts may be made if sales continue to slump.