Causes Of Cars In Indonesia Are Expensive, Gaikindo: Car Tax Reaches 40 Percent And Is Borne By Consumers

Exhibition GIIAS 2025. (Photo: Karisa/VOI)

JAKARTA - Chairman of 1 Indonesian Automotive Industry Association (Gaikindo) Jongkie D. Sugiarto highlighted the high burden on car taxes in Indonesia. According to him, the accumulation of taxes imposed on consumers is one of the highest in Southeast Asia.

Jongkie said that the tax portion could reach 40 percent of the selling price of vehicles. This condition makes car prices in Indonesia relatively more expensive than other countries in the region.

"I used to say that if the car price was 100 (million rupiah), how much did ATPM receive? How many entered the central and regional government treasury? That (the value) is about 40 percent (of the car price)," Jongkie said when met in the South Jakarta area, recently.

Furthermore, Jongkie explained that there are a number of tax instruments that make costs even greater. From the central government, there is a Value Added Tax (VAT) of 12 percent and a Luxury Goods Sales Tax (PPnBM) of 15 percent.

"That's just 27 percent. Not to mention there is a PPh, it goes into the central government treasury," he explained.

Meanwhile, from the local government, consumers still have to bear the Motor Vehicle Transfer Fee (BBNKB) of 12.5 percent and the Motor Vehicle Tax (PKB) of 2.5 percent. "The total is almost 40 percent, right?" he said.

With the tax portion reaching almost half the price of the car, Jongkie assessed that most of the funds paid by consumers actually flowed to the central and regional government treasury. Therefore, if the price wants to go down then consider the revision of the tax policy, such as the Covid 19 period.

"For example, during the DTP VAT (Government-Borrowed Value Added Tax) during the Covid 19 pandemic, the price (car price) immediately fell in price. Right? Immediately, people continue to buy and buy because the price is affordable," he said.

However, he also reminded that taxes are one of the important sources of income for the state. The funds are used to finance infrastructure development whose benefits are returned to the community.

"But on the other hand, we must also realize that the central and regional governments also need funds. Need income. For what? Yes, to make roads, to build bridges, to make various kinds, we have to be balanced too," concluded Jongkie.