The government has temporarily cut the luxury tax (PPnBM) on new car purchases and the value-added tax (PPN) on new homes in a bid to boost consumer spending.

Coordinating Economic Minister Airlangga Hartarto said on Monday that the tax cuts were expected to add between 0.9 and 1 percentage points to the country’s gross domestic product (GDP) growth this year by reviving the automotive, real estate and construction sectors, all of which are labor-intensive industries.

“These incentives, of course, cannot be separated from the people’s confidence in the vaccine and COVID-19 containment efforts as the keys to recovery,” he said during a joint press conference with the finance, industry and public works and housing ministers.

The country officially began its vaccination program on Jan. 13 with President Joko “Jokowi” Widodo taking the very first jab. The government plans to have vaccinated 1.5 million health workers by February, 38.5 million senior citizens by May and 141.3 million other citizens by March 2022.

The Office of the Coordinating Economic Minister is focusing its resources on stimulating consumer spending to book GDP growth of between 4.5 and 5.5 percent this year. In comparison, the economy contracted by 2.07 percent last year.

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