Automotive Industry Believes Tax Relaxation Increases Car Sales

Illustration (Photo: Doc Antara)

PT Toyota Motor Manufacturing Indonesia (TMMIN) stated that tax relaxation, such as Luxury Goods Sales Tax (PPn BM) incentives and Government-borne Value Added Tax (PPN DTP) could increase car sales in Indonesia.

Vice President Director of TMMIN Bob Azam said this was because during the COVID-19 pandemic a similar policy was implemented by the government, which resulted in an increase in Toyota's car sales of up to 40 percent.

"Our post-COVID-19 experience can grow up to 30--40 percent, and the taxes received by the government (tax revenue) have even increased even though the tax rate has been lowered," he said as quoted by ANTARA, Tuesday, December 10.

As for 2020, his party posted retail sales reaching 182,665 units or 31 percent of the total national market.

In addition to providing tax relaxation, said Bob, another thing that can increase sales is the ease of credit liquidity for household levels.

According to him, when compared to countries in Southeast Asia, Indonesia's household loans are not in accordance with gross domestic product (GDP).

"Our household credit is very small, only 9 percent of GDP, compared to Thailand which is already 26 percent and Singapore which is above 50 percent," he said.

The Association of Indonesian Automotive Industries (Gaikindo) is considering revising its vehicle sales target this year amid a decline in people's purchasing power.

The sales targets set this year are 1.1 million units, while the overall car sales data for the period January to August 2024 amounted to 560,619 units.

Meanwhile, retail sales in that period amounted to 584,879 units.

Previously, the Minister of Industry Agus Gumiwang Kartasasmita stated that his party was discussing incentives or stimulus for industry players regarding the increase in the provincial minimum wage (UMP) by 6.5 percent.

According to him, the examples of incentives that have been discussed by his party are those related to the automotive sector, namely the provision of a Luxury Goods Sales Tax (PPnBM) stimulus and Government-borne Value Added Tax (PPN DTP) which will be given not only for electric vehicles.