The World's Highest Indonesian Auto Vehicle Tax, Gaikindo Reveals The Evidence

General Secretary of Gaikindo Kukuh Kumara. (Photo: Theresia Agatha/VOI)

JAKARTA - The Association of Indonesian Automotive Industries (Gaikindo) stated that the tax on car vehicles in Indonesia is one of the highest in the world.

General Secretary of Gaikindo Kukuh Kumara gave an example, when the car got out of the manufacturer for sale it was only priced at Rp. 100 million. However, after the end consumer, the price became Rp. 150 million.

"I take an example if I leave the factory, the car costs Rp. 100 million. This only takes the figure to be easy. Until the end of the customer, I bought, friends from the media bought Rp. 150 million in payment. So, Rp. 50 million is a tax," said Kukuh in a media discussion entitled "Losing the Effectiveness of the Automotive Incentive" at the Ministry of Industry building, Jakarta, Monday, May 19.

"Well, this may be one of the obstacles in us," he continued.

Kukuh admitted, when he had the opportunity to become a speaker at an international forum in Vietnam, he received a complaint from the United States (US).

At that time, the US said, Indonesia was one of the countries in the world where the car tax was high.

"I once spoke in an international forum in Vietnam, it got a complaint from America, (they said) Indonesia is one of the countries in the world with the highest tax on cars after Singapore. I was really shocked," he said.

"As soon as (the data) is shown, I can only smile. Because it's true," he added.

Then, said Kukuh, his party compared it to a number of neighboring countries, one of which was Malaysia.

Kukuh said that cars such as Avanza were only subject to an annual tax of more than Rp. 1 million.

Meanwhile, in Indonesia, the same car brand is taxed up to IDR 6 million a year.

"Yesterday the car was produced here, then in Malaysia there was (an example) of Avanza. I'm sorry I called the brand, there is an annual tax of more than Rp. 1 million, here (Indonesia) is Rp. 6 million. So, you can imagine. If it is reduced, right, it's okay or made more rational," he said.

Today's modern era, said Kukuh, cars at a price of Rp. 300 million to Rp. 400 million are no longer luxury goods.

He said that people usually buy the car to make a living on a daily basis.

So, he continued, the government needs to evaluate the tax on the added value of luxury goods for certain cars in Indonesia.

"We can say that cars like this are no longer luxury goods. 20 or 30 years ago the refrigerators were luxury goods, people had refrigerators. Moreover, they have colored TVs. Now TVs are like ordinary goods, right?" Kukuh explained.

"Likewise, cars, because of what? Cars, for example, are types (the price) of Rp. 300 or under Rp. 400 million that have become part of their lives, because they are used to earn a living. So, it's time for us to evaluate whether we should impose an additional tax on the value of luxury goods for certain cars," he concluded.