Encouraging Zero Percent New Car Tax Acceleration, Ministry Of Industry: For Middle Classes To Buy Cars

Illustration. (Angga Nugraha / VOI)

JAKARTA - The Ministry of Industry (Kemenperin) continues to encourage the acceleration of relaxation of the Sales Tax on Luxury Goods (PPnBM) for new cars by 0 percent or cutting motor vehicle tax (PKB). The goal is to stimulate the market while at the same time encouraging the growth of the automotive sector which is increasingly sluggish due to the pressure of the COVID-19 pandemic.

The Director General of Metal, Machinery, Transportation Equipment and Electronics at the Ministry of Industry, Taufiek Bawazier, said that the realization of PPnBM incentives for new cars is urgent and needs to be resolved immediately. This is reflected in the lower level of demand for automotive industrial products.

The Ministry of Industry, said Taufiek, believes that by providing tax relaxation for new cars, it can encourage the recovery of the automotive sector as well as the national economy. Given the contribution of this sector to GDP of 10 percent.

"Hopefully the Ministry of Finance (Ministry of Finance) will not issue it (PPnBM) for too long. And we ask until December (2020) only, to be raised temporarily. This is our part for recovery efforts," he said, in Webinar # 3 Road to IDF 2021 with the theme "Prospects for Economic Recovery in the National Automotive Industry Sector", Wednesday, October 14.

Taufiek said that the utilization rate of the automotive industry has continued to decline in recent times. This is in line with the decline in demand for automotive products during the COVID-19 pandemic, especially from the upper middle class.

Therefore, he said, generating demand as a driving force is the main requirement, so that the middle class can use their money to buy cars and not save them in the bank.

"The incentive relaxation is whether it is 0 percent or at least provides new efforts to open up demand for the automotive sector. It means that industrial utilization to grow the industry will grow," he said.

Taufiek said that the activities of the automotive industry have a wide multiplier effect . One of them is from the aspect of absorption of large numbers of workers and linkages with other industrial sub-sectors, including small and medium industries (IKM).

"Nearly 1.5 million people live there. And other sub-sectors, such as rubber, glass, steel, and iron, the IKM is also there. So the multiplier effect is big. So if we issue the instrument, we are actually leveraging all the entities. or elements that exist in the automotive ecosystem itself, "he said.

The government, through the Ministry of Finance, will immediately approve the proposed PPnBM incentive for new cars of 0 percent. So, said Taufiek, this fiscal policy is believed to be able to revive the activities of the automotive industry.

"This must get support from the relevant ministries. The Ministry of Finance should all focus in that direction. So this is what we need to finish in the near future. If we turn on the automotive, all the sub-sectors will rise," he explained.