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Indonesia mulls higher vehicle tax to pay for fuel subsidies
By Harry Suhartono
CIBITUNG, Indonesia, Sept 4 (Reuters) - Indonesia may beforced to raise taxes on cars and motorbikes if sales continueto surge and result in higher government spending on fuelsubsidies, Vice President Jusuf Kalla said on Thursday.
Vehicles sales in Indonesia soared 48 percent in the firsteight months of the year, according to local distributor PTToyota Astra Motor.
'The burden from strong vehicle and motorcycle sales ishigher fuel subsidy spending, thanks to your good performance,'Kalla said in a speech at the inauguration of a new productioncentre for Toyota auto parts on the outskirts of Jakarta.
'So it might be better to raise the vehicle tax, eventhough it might slow down sales, but the government would havethe money to build infrastructure or compensate for higherspending on subsidies,' he added.
A higher vehicle tax would also be a 'fairer' option thanraising subsidised fuel prices again, Kalla said, as it wouldaffect vehicle owners and not the general public.
The government allocated nearly 127 trillion rupiah ($13.8billion) for fuel subsidy spending in 2008, and plans to cutthe subsidy bill to around 106 trillion rupiah next year.
Kalla also promised to provide Southeast Asia's biggesteconomy with better infrastructure, such as toll roads andports, and said the government would solve the country'selectricity problems -- which result in numerous blackouts --by next year.
Many businesses have complained about the power crisis,which can disrupt production. An industry executive said thatthe powercuts had hit the automotive industry in August.
CIBITUNG, Indonesia, Sept 4 (Reuters) - Indonesia may beforced to raise taxes on cars and motorbikes if sales continueto surge and result in higher government spending on fuelsubsidies, Vice President Jusuf Kalla said on Thursday.
Vehicles sales in Indonesia soared 48 percent in the firsteight months of the year, according to local distributor PTToyota Astra Motor.
'The burden from strong vehicle and motorcycle sales ishigher fuel subsidy spending, thanks to your good performance,'Kalla said in a speech at the inauguration of a new productioncentre for Toyota auto parts on the outskirts of Jakarta.
'So it might be better to raise the vehicle tax, eventhough it might slow down sales, but the government would havethe money to build infrastructure or compensate for higherspending on subsidies,' he added.
A higher vehicle tax would also be a 'fairer' option thanraising subsidised fuel prices again, Kalla said, as it wouldaffect vehicle owners and not the general public.
The government allocated nearly 127 trillion rupiah ($13.8billion) for fuel subsidy spending in 2008, and plans to cutthe subsidy bill to around 106 trillion rupiah next year.
Kalla also promised to provide Southeast Asia's biggesteconomy with better infrastructure, such as toll roads andports, and said the government would solve the country'selectricity problems -- which result in numerous blackouts --by next year.
Many businesses have complained about the power crisis,which can disrupt production. An industry executive said thatthe powercuts had hit the automotive industry in August.
